πŸ€‘DUSD Staking Yield

DUSD Staking Yield and StakeX Automation

How is the DUSD Staking Yield generated?

To decrease the amount of unbacked DUSD a DFIP introduced negative interest rates for DUSD loans. This means that you actually get paid when minting DUSD as the loan value (debit) decreases over time because of the negative interest rate. This should create an incentive for users to create more DUSD loans and therefore increase the amount of backed DUSD in the system. The payment for such loans is taken from the DEX fee. Half of the DEX fee gets burned (meaning that the token get removed from the system) and the other half gets distributed over all DUSD loans. The negative interest rate changes every day, depending on how much DEX fee was paid in the previous days. More information.

The core of this system lies in its β€˜looping’ mechanism. Here’s how it works: once a loan in DUSD is obtained against the initial collateral, this borrowed amount is then redeposited back into the vault as additional collateral. This action allows the user to borrow even more DUSD against this increased collateral. This process of borrowing and redepositing is repeated multiple times, effectively creating a loop. Each iteration of this loop magnifies the user’s staking capacity, enabling a much larger loan than the initial collateral would traditionally allow.

This looping continues until a point where the collateral value within the vault reaches a predetermined safe limit. This limit is crucial for maintaining the health and stability of the system, ensuring that the risks of liquidation are kept to a minimum. As the loop progresses, the system is ingeniously designed to reward participants. These rewards manifest in the form of reduced loan values, which result in an increased overall collateral ratio within the vault. By diminishing the loan amounts over time, the system inherently reduces the risk of liquidation, making it an attractive proposition for those seeking to maximize their returns in a secure environment.

StakeX utilizes smart contracts on the DeFi Meta Chain (DMC) to automate the staking process, handling the looping and monitoring tasks, thus mitigating risks and saving time for users. StakeX users simply deposit their DUSD, and the system manages the rest, including reward distribution and reinvestment.

How to calculate DUSD Staking APR?

APR=(NegativeInterest(NI)βˆ’BaseInterest)βˆ—2APR = (NegativeInterest (NI)-BaseInterest)*2

Example for APR Calculation

Negative Interest = 33.37 % (for current numbers see below) Base Interest = 5 %

APR = (33.37 % - 5 %)*2 = 56.74 % APY = 76.29 %

How high is the Negative Interest?

(click on spreadsheet 'Stabilization Fee payout' and look at pink field day 1-7)

More information on DUSD Statistics

More information about where the yield is coming from

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