DefiDollar (DFD)

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Basics

"While Dai has taken the lead as DeFi’s defacto stablecoin, it should come as no surprise that it frequently varies from its peg. To this end, we’ve seen a number of solutions aiming to create the “perfect stablecoin” - i.e. one which is both stable and trustless with manageable collateralization ratios.

DeFiDollar - a basket-backed stablecoin project - aims to do just that. By leveraging Aave’s interest earning aTokens and Balancer’s liquidity tools, DeFiDollar accepts existing stablecoins like Dai and sUSD to mint new Dtokens. To mint tokens, users lock collateral via Aave. The interest earned on the tokens are directed to an earnings pool which is used to supplement and stabilize the peg in the event DUSD collateral falls below their $1 pegs."

"An index of stable coins that uses Defi primitives to stay near the dollar mark and subsidize the collateralization ratio. DUSD is a stablecoin that is collateralized by Curve Finance liquidity provider (LP) tokens. We leverage Curve to handle the logic around integrating with lending protocols and token swaps; which are essential ingredients for the stability of DUSD. We also introduce a staking mechanism for additional peg safety."

History

  • Built at the ETHGlobal’s DeFi-focused hackathon called HackMoney (5-2020).

Audits & Exploits

"In the spirit of safety, DefiDollar launched with a $3M ceiling on the amount of DUSD which could be minted. In less than one hour after launch, that cap was reached."

Bugs/Exploits

  • From Blockthreat (4-2-2022):

"On January 7th, 2022 DeFiDollar thwarted an attempted hack by an early warning system."

Governance

  • From their docs (31-8-2020):

"We continue to explore various approaches to make DefiDollar permission-less and autonomous. Any updates on this front will be shared with the community before being implemented."

DAO

Treasury

Token

Launch

Token allocation

"The total supply of DFD is 100,000,000 tokens distributed as follows:

  1. Community Incentives: 56%
  2. Core Team/Future Hires/Advisors: 23%
  3. Investors: 11%
  4. Future Strategic Reserve: 10%

The community allocation will be utilized in 3 phases –  retroactive distribution, token launch event, and the incentivized liquidity mining program."

Utility

"Outside of the yield earned from DUSD staking, the original article states that DefiDollar “envisions the protocol to be governed by its users in due time” after establishing product-market fit."

  • They announced their governance token with MKR-like utility on 7-10-2020, called DFD:

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

  1. Whitelist & remove peaks
  2. Assign peak ceilings similar to the ones in Maker Vaults to balance the index
  3. Fine tune parameters like redemption fee within a peak
  4. 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."

Token Details

Stablecoin

DUSD

  • From their blog (7-10-2020):

"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."

Coin Distribution

Tech

How it works

"By leveraging Curve’s sUSD pool, users can mint DUSD using DAI, USDC, USDT, sUSD. The exact price of DUSD is a function of liquidity in curve and stablecoins prices from Chainlink oracles.

DUSD LP’s contribute liquidity to the Curve sUSD pool - called a Peak - meaning they collect lending interest alongside CRV and SNX rewards. DUSD staking offers collateral of last resort in tandem with a reserve pool to maintain the peg. More on how this works here.

The key benefit is that LPs can passively collect rewards, rather than having to manually claim in situations of high gas. We can liken DUSD staking to yUSD Vaults that leverage both the yCRV and ysusd pools with more protocols on the horizon."

Fees

Upgrades

Staking

"The team behind DeFiDollar will now use Curve Finance pools to collateralize its stablecoin, enabling liquidity providers to earn token rewards. DeFi Dollar (DUSD) is a stablecoin that leverages DeFi protocols to maintain the peg to the US dollar. Users deposit stable coins such as DAI and TUSD and mint DUSD in exchange. The stable coins are then deposited to Curve Finance pools in exchange for LP tokens and start generating income from the pools' trading fees. Some liquidity pools also earn interest from lending to Compound.

Users are also able to stake their DUSD in the system to add additional collateral and, in exchange, get rewarded with the pools' trading and lending fees. The team is currently gathering community feedback to decide how to allocate the farming rewards that will be obtained. The exact launch wasn't announced yet, as the code still needs to be audited.

DUSD system has four components that are called Streams, Peaks, Base, and Valley. Streams are the price reference data, which is sourced via Chainlink oracles. Peaks are the yield generating protocols that are supported by the system. Initially, the system will support Curve's susdV2 pool and y pool (other protocols like Aave and Uniswap might be added in the future). Base is the system's core contract, which is in charge of the mint/redeem operations and distributes protocol income. Valley is the DUSD staking system that allows users to stake their DUSD in exchange for receiving the protocol income."

Liquidity Mining

  • From their docs (31-8-2020):

"The liquidity mining rewards refer to the CRV and SNX farmed from the underlying curve pool. DefiDollar doesn't have a dedicated governance offering liquidity mining right now."

Different Implementations

Interoperability

Other Details

  • From their docs (31-8-2020):

"DefiDollar users incur a fee at the following steps during various user journeys:

1. While minting DUSD, curve charges a 0.04% fee. This is reflected in the amount of DUSD that the user receives. The DefiDollar protocol doesn't charge a separate fee.

2. While redeeming DUSD, the DefiDollar protocol charges a 0.02% fee. If DUSD is redeemed for a single coin (as opposed to all 4), Curve charges an additional .04% fee.

3. The redeem fee charged by the protocol gets directed towards staking rewards."

Oracle Method

Privacy Method

Compliance

Their Other Projects

Opeth

  • A collaboration with Opyn. From the announcement (27-4-2021):

"Capital efficient Stablecoin loans with Opeth! Opeth is a synthetic asset - fusing a put option with the underlying collateral. Opeth thus has a lower bound and can be used as collateral to issue stablecoins."

Roadmap

  • Can be found here (1-4-2021).
  • From their docs (31-8-2020):

"The current focus is to launch Version 1 and test the product-market fit of DeFiDollar. Based on feedback from the users the team will define milestones in the roadmap which will be shared with the community in the future."

"Outside of the yield earned from DUSD staking, the original article states that DefiDollar “envisions the protocol to be governed by its users in due time” after establishing product-market fit." Update (7-10-2020): they announced their governance token.

  • From their blog (7-10-2020):

"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."

Usage

"In the spirit of safety, DefiDollar launched with a $3M ceiling on the amount of DUSD which could be minted. In less than one hour after launch, that cap was reached."

Projects that use or built on it

Competition

Pros and Cons

Pros

Cons

Team, Funding, Partners

Team

Funding

Partners

(:

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