DForce (dToken)

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Basics

  • Founded in:
  • Mainnet release:
  • Based in:

"dForce network is an ecosystem of protocols aiming to be a full stack solution for DeFi. Lendf.Me, an open source money market protocol, and USDx, a meta-stablecoin, are the first two dForce protocols."

History

Audits & Exploits

Bugs/Exploits

  • On February 9, 2023 dForce Network lost $3.65M after it was exploited with a read-only reentrancy vulnerability. dForce attacker voluntarily returned all of the stolen assets after their Singapore-based IP address was shared with authorities (14-2-2023).

Lendfm $25M Hack

  • A good writeup from The Defiant (21-4-2020) on the hack can be read here. The day after the hack the funds were already returned by the hacker. "Curiously (27-4-2020), the hacker did not return exactly the same balance of assets as were stolen, but returned some of the value in other types of tokens. All told, however, they handed back crypto assets worth roughly $24 million as of press time."
  • From Week in Eth (26-4-2020): "The lendfme attacker gave all assets (value ~25m USD) back, apparently because the attacker’s IP address was on a server from accessing 1inch’s frontend."
  • Had a huge hack on their system which drained all their funds. As Decrypt puts it (19-4-2020):

"DForce’s recent win—it’s MultiCoin Capital funding— and its $25 million hack were only a few days apart. On April 19th, dForce’s lending platform lendf.me, forked from Compound v1 code. The fork was controversial.  The site was attacked by hackers who collateralized fake imBTC in exchange for real ETH, and transported them from dForce to Compound and Aave. The exploitation lies in a bug in imBTC, an ERC777 token, and a bug in lendf.me’s own security system."

"The total value locked in the dForce ecosystem was down by [99.99]% to $6 over the past 24 hours, per DeFi Pulse data. A day ago, the total value locked in the system was $24.9 million. The Lendf.Me website, a lending platform within the dForce ecosystem, is also not accessible at press time."

"ERC777 is widely known to be vulnerable to reentrancy attacks, something ConsenSys Diligence highlighted in the Uniswap audit and on which OpenZeppelin published an exploit on last summer."

"Lendf.me saw some $25 million in ether (ETH) and bitcoin (BTC) exit its wallets late Saturday and early Sunday after its money market pool was attacked.

Earlier speculation from other DeFi protocol builders say the attack was caused by imBTC, an ethereum token pegged one-to-one with bitcoin, used as collateral that turned out to be fraudulent, enabling the attacker to drain funds for nearly free.

Compound CEO Robert Leshner said on Twitter that the firm “copy/pasted Compound v1 without changes.” Leshner told CoinDesk on Telegram that the v1 code "was not flawed," but that the group was cautious about which assets it listed. "This is a follow-up attack to the imBTC Uniswap attack yesterday," he said, noting that imBTC is an ERC-777 token and "not a normal Ethereum asset. Smart contracts that include imBTC have to be extra cautious, and write additional code to protect against 're-entrancy attacks,'" he said."

"Perhaps refreshingly, Yang was contrite and took responsibility. “This attack was my failure. While I did not execute it, I should have anticipated it and taken actions to prevent it. My heart goes out to everyone harmed, and I will do everything in my power to make this right. I sincerely apologize to our users, to our new investors, and to my team for letting them down.”

At the time of publication, analyst Frank Topbottom revealed some of the hacked funds were being returned to victims. “Part of stolen funds went to @compoundfinance and  @AaveAave,” he noted, “another part was sold for MKR, BAT, KNC, LINK. Some kind of overly devoted DeFi fan??” Delving further, he noticed, “WOW. The hacker sent PAX to the address that sent the message to the hacker,” and linked to a block explorer for proof."

Governance

DAO

"The governance [of USDx] will pan out gradually to ultimately be a DAO-like model, where DFT holders dictate all governance issues, including pricing policies in dForce Network."

"dForce DF token holders govern its protocols including USDx's selection of constituent stablecoins, lending protocol’s supported assets, interest rate models, transaction fees, etc."

Token

Launch

Token allocation

Utility

Token Details

"dToken is a wrapper of ERC20 tokens, representing a pro rata claim of a specific ERC20 token plus yields earned, reducing the friction to use DeFi protocols, and improving the interoperability for other platforms or protocols to interact with dForce. This protocol can wrap any ERC20 token into dToken with interest-generating capability, i.e., dUSDx (a wrapper of USDx), dUSDT (a wrapper of USDT), or dETH (a wrapper of WETH). Users will receive dToken when they deposit the corresponding ERC20 token, which is proportional to the stake in the pool and is redeemable at any time. dToken can be transferred to other users, platform or smart contract."

Stablecoin

USDx

"dForce is featuring a dual-token model, with USDx as transaction stablecoin pegged to constituent stablecoins and the network utility token - dForce Token (DFT) to be used for transaction service (i.e mintage fee, interest payment etc), insurance fund, community governance, incentive mechanism, validator deposit etc; DFT also acts as last resort for dForce ecosystem, i.e issuance of DFT for recapitalization of USDx holdings in extreme events."

  • USDx is a meta-stablecoin (26-3-2019):

"USDx is an on-chain synthetic indexed USD stablecoin protocol, which is 1:1 pegged to a basket of selected stablecoins, USDx is issued as an ERC20 token and is automatically minted with a basket of constituent stablecoins (mostly fiat-back with high transparency and liquidity) through smart contracts. Its’ underlying portfolio includes USDC, TUSD, PAX and DAI, which is adjustable via on-chain governance.

USDx is backed by four constituent stablecoins, with the following weighting: 30% USDC, 30% TUSD, 30% PAX and 10% DAI . The selection and weighting of constituent stablecoin is assessed based on the following parameters/factors:

1) Transparency & regulatory compliance;

2) Outstanding floats;

3) Daily trading volume and OTC liquidity;

4) Supported exchanges.

USDx is essentially pegged to mostly transparent fiat-back stablecoins, the trust model is simple and scalable, the peg is maintained via arbitrage dynamics between USDx and its constituent stablecoins. Given its portfolio diversification, it is exposed to less market, counterparty, liquidity and regulatory risks. Most importantly, USDx is an adaptive and self-amending protocol, able to adjust its constituent portfolio and their respective weighting via on-chain governance.

Despite we have more fiat-back and centralized stablecoins in our basket, our goal is to gradually diversify into more decentralized and fungible stablecoins (like DAI and other collateralized or algorithmic stablecoins) and the governance will pan out gradually to ultimately be a DAO-like model, where DFT holders dictate all governance issues, including pricing policies in dForce Network."

Tech

  • Whitepaper can be found here.
  • Code can be viewed [insert here].
  • Built on:

Transaction Details

How it works

Lendf.Me

"Lendf.Me, an open source money market protocol Lendf.Me currently supports the following tokens: USDx, USDT, DAI, USDC, PAX, TUSD, WETH, imBTC, HBTC, HUSD, and WBTC. Anyone is able to supply assets to Lendf.me and begin earning interest every block. The markets’ Interest rates fluctuate based on the utilization rate of each lending pool.

Additionally, you can borrow up to 80% of the value of supplied assets (a collateralization ratio of 125%). Lendf.Me charges a 0.01% origination fee on every loan. Liquidation occurs if/when your collateralization ratio falls below 125%; your collateral is sold to repay your loan plus a liquidation penalty equal to 10% of the value of liquidated assets."

"Lendf.me comprises of the following modules: Money Market Contract (based on Compound V1), Interest rate models, oracle, liquidator, liquidation monitor, market dashboard and front-end UI&UE.

On loans defaulting:

"Borrowers need to collateralize a minimum of 125% crypto-assets in a smart contract to borrow a loan. If the cover ratio falls below 125% and there is no top-up of collateral or repayment, margin call will be triggered, anyone in the market can help you to repay the loan and get the corresponding collateral at 10% discount, so your collateral ratio can be restored back to 125%. Given we only deal with assets and collaterals with robust market liquidity (i.e ETH and wrapped BTC)，we believe 10% liquidation discount and 25% price buffer is sufficient to deal with default risks."

Staking

Different Implementations

Interoperability

Other Details

Compliance

Oracle Method

"Like many other DeFi projects, we aggregate real-time price from a group of Exchanges. We mediate those price feeds from various sources and publish the mediated one onchain periodically. In the near future, we will also put forward a new incentive structure for the community to participate in providing oracle services."

Their Other Projects

Roadmap

  • Can be found [Insert link here].
  • They plan (26-3-2019) to go towards a DAO.

Usage

Projects that use or built on it

Competition

  • All other lending and borrowing platforms across DeFi. Like Compound, dYdX, etc.

Pros and Cons

Pros

Cons

Team, Funding, Partners

Team

  • Full team can be found [here].

Funding

"The dForce Foundation closed a $1.5 million (14-4-2020) strategic round led by Multicoin Capital and joined by Huobi Capital and Chinese bank CMB International (CMBI) last week. The funds were intended to grow its staff and launch new DeFi products in the coming year."

Partners

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