dAMM is an under-collateralized lending platform for any token with:
- Liquidity pools for non-stable crypto-assets
- Under-collateralized borrowing for whitelisted market makers and institutional borrowers
- Algorithmically determined interest rates
Market makers and investors can borrow any token with a secure liquidity pool on dAMM, allowing them to provide liquidity and trade across all centralized and decentralized exchanges.
Token issuers, foundations, DAO treasuries, and individual investors with long-term investments in a project can deposit into dAMM pools. Two key benefits to depositors are earning yield on their assets and contributing to the liquidity of a protocol or token they support. Additionally, to ensure incentives are aligned between borrowers, lenders, and the platform; borrowers must stake a percentage of their net total borrows in dAMM.
dAMM For Lenders:
Access to institutional yields via a simple frontend, with the ability to earn interest in the pool’s specified token. Market makers use the capital provided to significantly enhance the liquidity in the pool’s specified token. Additionally the ability to earn both Liquidity Bonding Rewards for dAMM tokens (reference the liquidity bonding section below) and a portion of the protocol’s revenue.
dAMM For Market Makers:
Access to borrow any token listed. We offer secure under-collateralized lending for market makers with significant onchain credit history (from notable under-collateralized protocols firms such as Maple, TrueFi, or ClearPool).
What is Liquidity Bonding?
With the benefit of hindsight, we believe that liquidity mining has been an unsustainable tool for protocols to rent liquidity from their users. The most valuable users of a protocol are incentivized to farm rewards and immediately sell the tokens they mine. It is only when liquidity mining is turned off that the true utility of a protocol is seen.
As a result we wanted to build a token distribution mechanism that:
- Rewards our most active users
- Creates positive value for the protocol as a whole
As such, dAMM tokens will be distributed through a new mechanism we call, “Liquidity Bonding.”
Liquidity Bonding blends several concepts from other major DeFi protocols. Users staking capital on the protocol will receive a LP token, “bdAMM,” (short for bonded dAMM) is claimable to users. bdAMM is immediately redeemable for dAMM at a discount to market price.
Market makers will also receive dAMM incentives for providing consistent data on their market making activities. This includes verifiable trading volume, +2%/-2% depths in markets, and uptime across pools.
Protocol Managed Liquidity:
We re-stake all of the revenue generated from bond sales back on the dAMM Platform by the dAMM Foundation in USDC, ETH, WBTC pools. 25% of the Protocol Managed Liquidity moved off platform and held as protocol insurance.
Staked dAMM Rewards:
Users can stake dAMM on the protocol and receive a proportional share of 10% of the revenue generated from all interest on the protocol. Staked dAMM is also the governance mechanism of the protocol, and will be able to vote on dAMM Liquidity Bonding rates, utilization curves of platform pools, and future governance proposals.
Roadmap:
FAQ
How do we insure against defaults?
Providing security and protection is a key value of ours. The Protocol Managed Liquidity has a dedicated backstop for any loan defaults from market makers or institutional borrowers on the protocol. It currently is set at 25% of the proceeds from bond redemptions. Additionally in the case of a market maker defaulting, legal enforcement of the master loan agreement signed will take place.
Does dAMM help the liquidity of the tokens listed?
Having a token listed on dAMM can significantly improve liquidity across all centralized and decentralized exchange markets. All market makers permitted to borrow on day one are liquidity providers first and foremost.
How many tokens does dAMM plan to list?
Our goal by the end of 2022 is 200, and several hundred by the end of 2023.
Can I vote on governance proposals with $dAMM?
No, protocol governance is strictly limited to $gdAMM holders.
Why are forecasted yields on dAMM higher than on other protocols?
Typically, borrowers are willing to pay an interest rate premium for under-collateralized lending. For example, in 2021 when over-collateralized lending platform Compound Finance was offering around 2.0–2.5% interest on $USDC, under-collateralized institutional lenders were offering 8–12% interest for borrowers.
For more information on dAMM, check out our white-paper:
https://damm-finance.gitbook.io/damm-finance/0onmhbd8IPAoHstKw9eg/
