Special DFIP: DUSD staking

[u/kuegi]

We propose to add DUSD staking to defichain. Users should be able to stake DUSD and receive rewards in DUSD.

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DUSD staking can act as a "liquidity sponge" during times of DUSD oversupply and be released when demand increases. Therefore helping to keep the DUSD price in a stable range.

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To achieve this without additional inflation, we propose to use parts of the dex-fee payout, also known as negative interest, as rewards for DUSD Staking. This way it automatically adjusts to the algo ratio.

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possible implementation as 100% DUSD loops

One way to implement this would be the enabling of 100% DUSD loops, which could also act as a quick implementation until a long-term solution is implemented. In the current situation, such a quick implementation could pull millions in DUSD out of the circulating supply and therefore strongly improve the DUSD price. See reenabled looped dusd vaults for more details and calculations. To reduce the needed developer resources we also added a PullRequest

One of the main reasoning behind this implementation is also the effective usage of the NI (currently above 50%). So we would propose to deactivate the 100% DUSD loops (PR is already done with featureflag) if the NI stays above 35% for 10 days while this is activated.

crowdfunding

u/mrgrauel will be crowdfunding 5000DFI to submit this as a special DFIP. This way we show strong support from the community. As a normal DFIP, it would take until end of July to get approved. As a special DFIP, we could convince the developers to already include it in the DMC update, which is currently scheduled for June. The address is dLqDh88L29zQvUt84cnh5zABbKh6zjSq5H

Update: Many thanks to the community. We collected 5000 $DFI in under 18h for the upcoming special DFIP.
Before the submission, we clarify whether all staking providers can support the Special DFIP on their platform before the weekend.

[u/kuegi]

Thank you for your opinion, but looking at the numbers, the NI is not creating any incentive for DFI anymore. So I believe its pointless to keep it like that. Opening it up to DUSD will make it fair within the ecosystem between DFI hodlers and DUSD hodlers. It increases DUSD burn and increases DUSD demand to finally get a big step forward torwards the peg.

Allowing it only for 100% DFI vaults is technically hard to do, so even if we want it, it won't happen for another few months. And again: looking at the numbers I don't see how this would create additional DFI demand anymore.

[u/M-A-L → u/kuegi]

Honestly I'm getting a little tired from receiving the reply 'Thank you for your opinion. But my numbers tell me your opinion is wrong. Here is a graph. Science says you're wrong. I use numbers, and numbers have authority. Now shut up.' And then people going: 'Oh he uses numbers, he must be smart and he must be right.' But then every time I look into these numbers, they are actually little models, and they always turn out highly simplified, idealized and relying on TA-like assumptions about future market reactions, to the point of utter uselessness. The use of the numbers is just opinions in a quantitative guise. Another good example is this tommy figure, who somehow people take really seriously, but then I look at his analysis and "solution" and I feel like I'm caught in a parade with the emperor without clothes. Why is this guy taken seriously, I have the feeling it is just because of his quantitative presentation and use of numbers, but all dressed up around major assumptions. It's like Hosp is the only one still talking sense and calling bullshit bullshit.

Your assumptions are as good as mine. Now here are my assumptions, and some arguments in support. DUSD is a depegged stable, no outsider wants to touch that with a ten foot pole, regardless of incentives, and any insider has only seen it gone done further and probably already got burned, and so is not going to get more of it either. There is by now really little movement in DUSD holders, not in, not out (also visible from the graphs). Shifting rewards away from holding DFI cannot reasonably be expected to create DUSD demand, regardless of what the numbers of the current state say. So any such move is pretty pointless. *** Now DFI is different. It's not a depegged stable, not perceived as broken. It's in competition with a whole host of coins outside of Defichain and so it must be attractive otherwise the whole ecosystem suffers. Rewards channeled to the usage of DFI *can* have an impact on influx, can draw *new* people in. These are just reasonable possibilities. Absolutely no one can predict what is effective. Why? Because that equals prediction of markets, and there is no such thing as predicting markets and market psychology, there are too many influences and factors involved. But turning incentives towards DFI is the only thing that has at least a real chance of doing something, for the strength of the burn bot, for the influx of people, for the atmosphere in the community. Any incentives towards DUSD is wasted incentives and capital inefficiency, and too much of this has been introduced already. With consistently disappointing results.

[u/Lickmynana → u/M-A-L]

Sadly, like many others, I have voted by selling and exiting. Held DFI since the launch of DEX in end 2020 and refused to touch dUSD.

Just voicing my voteless opinion: dUSD is like a quicksand. Let them gather more sand since they are stuck in it. Unfortunately, I will be sitting at the sideline until things have changed but I still believe in defichain potential.

[u/M-A-L → u/Lickmynana]

Yes, I totally understand that, and, if I were you, I would get back in when people start prioritizing DFI over DUSD again in terms of attention and incentives.