The Next Chapter of DefiDollar

Retroactive liquidity mining for DefiDollar LP’s

Siddharth Jain
Oct 7, 2020 · 7 min read

The Vision:

DefiDollar ($DUSD) aspires to be a risk-insured stablecoin layer for DeFi. It aims to provide a safe and stable way for users to hold their assets. In the shorter term, $DUSD is a stablecoin optimized for peg safety, yield and diversification. The basket approach diversifies the risk, allows more types of collateral to be onboarded and allows integration with yield generating DeFi primitives. The inbuilt protocol mechanisms along with arbitrage helps keep the peg close to $1.

Due to the rapidly growing demand for stable assets and clearer regulation, we expect to see more innovation in the stablecoin ecosystem. We believe that the bar to issue new stablecoins will keep going lower. This adds to the number of stablecoin alternates leading to user bearing cognitive load to choose the best way to hold their assets. The probability of a particular stablecoin failing its peg and resulting in loss of user funds will become higher with time.

Another effect that we anticipate with the increased number of coins in circulation is the fragmentation of liquidity across the spectrum.

Both these effects give rise to an aggregation opportunity in the stablecoin markets, which if addressed properly can result in a resilient stablecoin index that is agile enough to stave off competition and become the stablecoin of choice not just for DeFi but for digital value transfers.

This is the reason we are building DefiDollar. To bring together crypto and fiat backed stablecoins and in the future even sovereign backed stablecoins in a simple manner.

The goal is to make the index stable, trustworthy and resilient over time. Another way to look at DeFiDollar is in the form of an abstraction layer over exciting avenues in DeFi. In the future, DefiDollar will play a huge role in plugging the gaps for the ecosystem to transition from DeFi to a broader DeFi + CeFi horizon. The team is motivated to drive DUSD to be the default way to onboard users transitioning from Web 2.0 to the world of Decentralized finance.

Roadmap:

Stablecoin adoption isn’t easy. People want liquidity before committing their funds to a particular asset, even a stablecoin. It needs to be available for exchange on the platforms the users frequent. It’s a classic chicken and egg conundrum. We plan to tackle this in stages.

Given the DeFi ecosystem moves at breakneck pace, we have come up with milestones to achieve instead of a rigid roadmap. This allows us flexibility and room to experiment with the trends that are prevalent and provide the best value for the users of the protocol.

Short term: To provide a trusted and stable index that allows users to hedge risk and generate yield

Aim: To iterate and achieve the right product market fit and having a small but loyal bunch of users. We aim to generate reasonable yield from our peak integrations (underlying DeFi protocols) and also the upcoming Liquidity Mining program.

Medium term: DUSD Becoming synonymous with stable assets and the stablecoin of choice for DeFi

Aim: To be integrated with the leading DeFi protocols & subsequently being used as a building block for on chain applications looking to have a stable asset component

Long term: Be used for broader applications outside of DeFi and to onboard users to digital assets

Aim: become the medium of exchange for digital assets and wrt adoption in retail: what Terra is currently to Korea but on a global scale.

We have a grand vision, and we strive to realize that.

The community is going to play a big role in shaping the future of the protocol that we envision and thus we are launching a liquidity mining program to ensure that the stakeholders of DeFiDollar — the LP’s have the decisive say in the same.

PS: Stop reading any further if you are hunting for a ~1000% APY yield farming flip farm. There are plenty of options for degens out there. We are not one of them.

In the short span that DefiDollar has been live since Aug 27, A lot has happened with respect to development and iteration of the protocol:

  • Launched with the sUSD pool & DUSD staking
  • Launched a fork on Swerve — Swervy swDUSD to test yPool integration and well; to live the DeFi YOLO spirit :)
  • Introduced the yUSD integration while deprecating the sUSD peak & DUSD staking

Currently the team is actively working towards:

  • Reinstating an improved and robust Staking mechanism
  • Building a sUSD/DAI peak to provide a peak with only decentralized stablecoins
  • Governance and stability modules

This has been in line with our development goals that are to achieve a certain level of product market fit and implementing early user feedback before taking the protocol ahead.

We would like to thank the community, users and our partners for helping lay the foundation of a strong protocol while motivating us to take a user centric & security first approach.

Thus we begin the journey towards the next phase of DefiDollar and we can’t stress enough that we would not be here without our community and early believers.

We are happy to announce DFD: The DefiDollar protocol governance token. The intent of this article is to provide a glimpse into its functionality and also its distribution.

DFD utility:

DFD will be an integral part of the DefiDollar ecosystem. It will serve two primary functions:

Governance :
The DFD token will be used to make critical protocol decision like the following:

  • Whitelist & remove peaks
  • Assign peak ceilings similar to the ones in Maker Vaults to balance the index
  • Fine tune parameters like redemption fee within a peak
  • Decide on the distribution of the protocol income

Protocol Backstop:
DFD will be called in to act as the ultimate backstop against volatility. Similar to the fashion in which MKR acts as the last line of defence for DAI. There are other ways the protocol is protected against volatility and which will be discussed in an upcoming post.

DFD tokens will grant the holders the right to participate in the above protocol governance process. The transition to governance will be gradual and shipped alongside some of the key features of the protocol.

DFD Token Allocation

The total supply of the DFD is 100 million (100,000,000) and is distributed as follows

  • Community Incentives: 56%
  • Core Team/Future Hires: 23%
  • Investors: 11%
  • Future Strategic Reserve :10 %

Community:
The 56% allocation to community will be distributed in the form of liquidity mining incentives which are a combination of:

1. Retroactive Distribution
The exact percentage of tokens allocated to retroactive distribution will be released closer to the governance token launch date. However, indicatively we will be deciding the distribution based on the following user profiles:

The distributions will be considered from the time the $DUSD cap was raised to $9million (Sep 4, 2020 1630 UTC).

A. $DUSD holders and stakers until Sep 22, 2020 1600 UTC

B. $swDUSD (The swervy fork) holders and stakers until Oct 7, 2020 1600 UTC. Please note that $swDUSD is not being actively maintained now; please withdraw your liquidity.

Following incentives will be considered from Sep 22, 1600 UTC until the token launch event

A. DUSD <> USDC Balancer pool liquidity provider. The current incentive to distribute yVault yield to LPs will continue.

B. DUSD <> ETH uniswap liquidity providers
Starting Oct 7, 2020 1600 UTC, the rewards to the ETH pool would be higher to subsidize the potential divergent/impermanent loss for the LPs.

C. Wallets that trade $DUSD from the above pools

We are also happy to consider other pools that may be brought forward by community members and contribute value to the DefiDollar ecosystem. Actual distribution amounts will be a function of liquidity provided, the duration for which the liquidity was provided for, trade volumes and frequency.

2. Token Launch Event (Genesis)
We are cooking up a new and exciting method of conducting the token genesis that is fair, prevents information asymmetry and is favourable to retail users and farmers of all acreages and risk appetites.

3. Liquidity Mining Program
Rest of the tokens allocated for community will be used to incentive a variety of programs that include bootstrapping liquidity in the protocol, encourage participation in upgrades and integrations, and more generally creating a vibrant DefiDollar community.

Exact distribution schedule for the Liquidity mining program will be shared in the genesis ceremony announcement post.

Investors:

Pre-Seed Round: The vesting schedule for pre-seed investors has a cliff of two months and the tokens then vest linearly over 30 months.

Seed Sale Round: The initial unlock will be 0. The seed sale tokens start vesting from the genesis ceremony linearly over a period of 24 months.

Strategic reserve:
The 10% protocol reserve allocation is earmarked for Operations/Marketing/Partnerships and future fundraises. This will vest linearly from the genesis ceremony over a period of 12 months.

Team:
The team has been iterating on the product for about 6 months. In addition to that, the 23% reserved for Core Team/Future Hires/Advisors tokens will have a vesting cliff of two months post token launch and then vest linearly over the next 3 years.

The LPs, team and investors vesting will happen every block, once it begins.

Please note that we are increasing the DUSD redemption fee from 0.02% to 0.1%. This fee is distributed as additional yield to the remaining participants in the pool.

The genesis ceremony launch date will be communicated soon! Stay tuned and don’t forget to mint those sweet DUSDs. https://app.dusd.finance/

DefiDollar

Multi-Chain Defi Protocol Lab