SingularityDAO DynaSets: Long, Short & Leverage
Greetings Singularitarians,
Today we share with you the full details regarding the current implementation of shorting and leverage to DynaSets. We strongly encourage that anyone considering joining this DynaSet takes the time to read and understand the following article.
In its current form, this set should be considered an opportunity for those who wish to participate, to experience the strategies being used in preparation for future versions.
Beta specifications
- The Beta DynaSet contributions will be capped at $4,999,999 of total value locked.
- The minimum contribution will be $500 equivalent per token per forge.
- The Beta will run for 3 months or less depending on the tech migration from dYdX.
- The DynaSet will be trading BTC & ETH exposure.
- Users will not be able to withdraw nor redeem during the Beta trading period. Redemption will be enabled at the end of the trading period.
- Management & performance fees will be taken at the end of the Beta trading period.
- Management fees 2% annualised.
- Performance fees 20%.
- Please read the T&Cs here.
How it works
- Users deposit tokens in the forge during the contribution period.
- Contributions are forged.
- DynaSet LP tokens are minted.
- DynaSet smart contract receives the funds.
- DynaSet smart contract deposits funds on dYdX.
Trading execution
The trades will happen on Layer 2 and will use the centralised solution dYdX (https://dydx.exchange/). Our DynaSet smart contract will interact directly with dYdX API for funds deposits & withdrawals. Our DAM will then connect to dYdX DynaSet’s account to trade with leveraged positions. We acknowledge that this solution is not the best one towards our goal of decentralisation but researching this early market of crypto leveraged trading did not bring up protocols that meet all of our expectations yet (liquidity, decentralization, security, leverage, collateral). As we wanted to provide our community with a leveraged DynaSet we opted for dYdX as a temporary solution that ticked all the boxes except the decentralisation.
Contribution
Users will have a specific period to contribute to the DynaSet. During that period users will be able to deposit within a list of tokens inside the forge smart contract through our dapp. This contribution will then be swapped to match the DynaSet weight and to mint DynaSet tokens. The value of the users contributions will be considered at the forging time. We do not take accountability for the volatility of the deposited tokens during the contribution period.
DynaSet tokens minting and value computation
LP token price depends on the performance of the Dynaset. if the dynaset is performing very well the Total value locked in the Dynaset as compared to the dynaset total supply will go up hence the dynaset price will go up.
Dynaset Price =Total value locked in Dynaset / Dynaset total supply
Dynaset LP received for contribution =Contribution equivalent in USD / Dynaset Price
Withdrawal of DynaSet tokens
Users keep custodial of their funds by owning a share of the DynaSet in the form of DynaSet tokens that can be withdrawn (taken from the forge smart contract to the user wallet) at the end of the contribution period from our dApp. This transaction will be charged with a gas fee as it happens on-chain. Please note that this won’t be available for DynaSets in Beta stage.
Redeem
The function of redeeming consists of burning the DynaSet tokens to get the desired tokens. If users decide to redeem, they will pay the corresponding swap fees that the DynaSet contract will do to get to the desired token. This will not impact dYdX DynaSet as it will be full USDC. Users can redeem at any time with a cooldown delay, the redeems will happen once in a week. If the users redeem outside of the redeem period, they will be charged with a capital cut. Please note that this won’t be available for DynaSets in Beta stage.
0–30 days 5%.
31–60 days 4%.
61–90 days 2.5%.
During contribution/redemption period : 0%.
Fees Structure
On every DynaSet there will be some periodic fees taken and that applies to leverage DynaSet as well:
- Management fees will be taken to ensure the trading execution fees of the DynaSet.
- Performance fees will be taken on the alpha generated if the DynaSet performs above the hurdle rate, and distributed between DAO and DAM.
These fees will be taken periodically, please refer to the “Beta specifications” section for the details on how it works for the Beta.
About dYdX
dYdX is a leading exchange that currently supports perpetual trading. dYdX runs on smart contracts on the Ethereum blockchain and allows users to trade with no intermediaries.
Funds safety on Layer 2
In order to guarantee self-custody of the funds, at any point in time, a user may opt to perform a forced request. Forced requests are initiated by a Layer 1 transaction, to avoid censorship. In case the request is not served within a limited time frame, the user is able to freeze the StarkEx contract (and thus the exchange) and withdraw directly from the frozen contract. There are two forced actions: forcedWithdrawal andforcedTrade.
When a forcedWithdrawal request is submitted, the StarkEx Contract either withdraws funds for you or proves that the request is illegitimate (e.g. a user requests to withdraw more money than their off-chain position.) If StarkEx fails to withdraw funds within a limited timeframe, a user can call the freeze function — effectively preventing the StarkEx contract from changing its state, and enabling an “escape mode”, in which users can exit with USDC based on the total value of their position in the last accepted on-chain batch.
When a forcedTrade request is submitted, two users trade between them a certain amount of some synthetic against another amount of collateral, to submit these amounts on-chain. Either the system performs the trade (or proves its invalidity), or the users get the ability to freeze the on-chain StarkEx Contract and retrieve their funds.
dYdX Smart contract audits
We take the security of our smart contracts extremely seriously. We’ve conducted rigorous internal testing and contracted independent top security firm PeckShield to perform a thorough audit of our smart contracts. Our audit will be open-source, and verifiable by anyone. Further, our track record speaks for itself: since launching our first product in October of 2018, dYdX is one of the only major DeFi protocols that have yet to receive a bug report of user funds being at risk. No users have ever lost funds on dYdX.
More details about dYdX :
In conclusion
While this current implementation is by no means perfect, it represents a large step toward a working, fully decentralised solution, which we are already deeply researching and experimenting with. For the time being these superior (fully decentralised) solutions are still too new. As they grow and prove to stand the test of time, our DynaSet offerings will be able to grow with them. Until that time, we hope you enjoy this iteration of our Long, Short and Leveraged DynaSet.
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