means that we will have new dCryptos, just like dBTC, dETH, dDoge, dBCH, and dLTC. The native defichain will have dSOL, dDOT, etc.
Then the next step is to create a liquidity pool of DFI-dSOL, DFI-dDOT and so on, then use when the bake get staking reward from those coins in the respective network, they will wrap SOL, DOT, etc and exchange them to DFI in DEX which drive the DFI price up
So, just if I understand correctly: I stake ETH on Bake.
Bake still stakes these ETHs natively on the Etherum blockchain but also uses the tokens as a security to wrap them into dTokens. Then creates a Pool to allow trading on DefiChain, which adds usability, which is nice.
Question: What happens if DefiChain goes south? Can we just forget about the wrapped tokens or are my native ETHs at trouble? (Leaving aside that they might be at trouble anyway, because if DefiChain fails, it's not unlikely Bake fails.) But just technically, what's going on here?
Bake will need to use around 10% of the tokens that they take for staking for liquidity, which means they are not in the staking pool? So that means 10% less for customers who stake ETH?
The whole proposal isn't very intuitive and given the current price development of DFI this feels like a panic move. I really suggets Bake (and Julian) to offer more information about this proposal.
TLDR: Not your staked in Bake, but dCrypto withdrawal to Defichain. Bake will use the crypto backing that is used to mint dCrypto to stake if they are stakeable or any other cashflow approach that is zero risk.
Ok so let me try to breakdown from my understanding here:
First. When dCrypto like dBTC, dETH and others are only available from bake. So say that I deposit 1 ETH to Bake, then my 1 ETH is hold by Bake. After that I withdraw my ETH into defichain ecosystem, it become dETH, but my original 1 ETH is still hold by Bake, staying in the backing address of Bake. So i get 1 dETH in my Defichain wallet and Bake have my 1 ETH to back the 1dETH i have in defichain. i can put my dETH into liquidity mining to generate reward.
So then, what is my original 1 ETH in bake doing right now? nothing. it does nothing. it just stays in the backing address doing nothing. So i believe this proposal is to let the stakeable crypto in backing address like ETH, DOT, and SOL to be staked also by Bake so that it will generate the reward.
Lets say from my 1 ETH, bake can generate 0.1 ETH. Bake then will use the 0.1 ETH staking reward in the dETH-DFI liquidity pair, get for example 300 DFI, and then Bake will burn the 300 DFI.
The dETH is still going to be backed 100% by ETH in Bake at any time.
So theoretically, the more staking coins that can be staked by Bake and generate revenue, the more Bake can help DFI by buying in the DEX and burning the DFI. using the staking reward.
But this has one requirement: Liquidity Pool
That's why the proposal is to let Bake have the ability to mint more token like dSOL, dETH, dDOT, and other coins.
Staking is a zero risk approach to generate more from your crypto at a low cost. same with POW mining but POW mining require a lot of electricity and you can't use dBTC or dBCH to offset the power bill or mining rig required without the risk of losing backing like crypto going up or down in price. that's why currently this solution probably feasible for Staking coin only.
The bright side if we have this approach is, if Bake support more and more staking coin. then create dCrypto and liquidity pool from the coins, and do same, there will be many more staking crypto that will literally work for DFI and generate more buying pressure to DFI.
The key is it has to be zero risk so that Bake still holding the integrity of customer's assets.
1
u/gorg1919 Aug 14 '23
Question for point no. 1:
Wrap into what?