Protocol fee-sharing enabled via the DFD buyback Vault
DFD Staking with ibDFD — Interest bearing DFD
In an earlier forum post, the team explored the idea of enabling a yearn style DFD buyback vault that enables protocol fee sharing with the community.
You can take a look at it below:
After speaking to the community and eliciting their feedback, earlier this week we shared the first DefiDollar improvement proposal — that called for a vote to redistribute the protocol income to the DFD buyback vault powering the ibDFD (Interest-Bearing DFD).
This proposal has since concluded with a clear majority and the team is moving forward to implement the same. The protocol income currently channeled to ibDUSD will be split as follows:
ibDUSD — 50% & ibDFD — 50%.
The DFD staking will go live from Dec 25, 14:00 UTC.
As a consequence, the withdrawal fee on the ibDUSD savings account has been waived from Dec 25, 14:00 UTC — to Dec 26, 14:00 UTC. Moreover, interest will also not accrue for the savings account LPs during this 24 hour period.
This marks a small milestone for our upcoming stability module! Staked DFD will bear the risk of peg failure and users staking are rewarded for enabling the protocol’s backstop layer. This staked DFD earns rewards both in form of protocol income and also DFD emissions. This is a design inspired from Synthetix’s staking and we are iterating on how the final design will look like. Coming soon..
DFD Staking
A user can participate in ibDFD staking in the following manner:
1) Deposit DFD to the ibDFD contract — Visit https://app.dusd.finance/staking
2) User gets ibDFD in return — an interest bearing token that gets stronger as the protocol accrues income.
Unlike some of the LP pools where two-sided liquidity is needed this will provide DFD holders to become an LP with single-sided liquidity, i.e accruing rewards by just supplying a single asset without any slippage.
To participate deposit DFD that you want to mint ibDFD with. Withdrawals can be made anytime but do please note: There is a 0.5% redemption fee on exits that is used to guard against malicious actors trying to front-run the rewards by depositing DFD to the ibDFD vault just before rewards are claimed periodically. It is similar to the exit load currently being implemented in yVaults and ibDUSD.
Benefits for Community
- Value accrues to DFD holders which is essential to strengthening the DefiDollar ecosystem as their incentivization is critical for the protocol health. The DFD holders will play a major role in protocol governance and also in the upcoming safety module that will act as a backstop against volatility.
- We anticipate a surge in DUSD supply as more people would want to participate in yield farms using DUSD pools to farm DFD. This would lead to positive network effects.
Conclusion
The ibDFD vault provides a simple interface for DFD holders to become LP’s and earn interest from the protocol over time. It enables a fee-sharing mechanism that empowers the community to become stronger alongside the growth of the protocol.
