After one of the most successful launches in DeFi history, it is time for the DSD economic experiment to advance into the next epoch. Improving on the existing mechanics and setting the cornerstones for a stable, reliable, and scalable store of value for the decentralized economy.
This article lays out the final specs of DSD V2 (DIP-10). It is an extension of our previous write-up on DIP-10. It is structured as follows:
*please let us know if you find mistakes or suggestions.
Dynamic Set Dollar (DSD) is an ERC-20 self-stabilizing decentralized censorship-resistant non-collateral backed USD stablecoin.
For a more comprehensive overview of the differences between DSD and other stablecoins, please refer to this article.
DSD is a fully decentralized stablecoin that unlike centralized coins, e.g. USDT, has no 1:1 backing through a centralized USD treasury. To be highly capital efficient it does not use any collateral, like the main competitors DAI or sUSD. The voluntary elastic supply mechanic is different from Ampleforth (AMPL) and Based (BASED). …
We are excited to introduce Dynamic Set Dollar: a next-generation elastic supply stable token that, by improving upon its predecessors through the integration of several novel features, is destined to become the first fully DeFi compliant stablecoin.
DSD uses the mechanics from several other projects and is mainly inspired by ESD, Empty Set Dollar. ESD set a strong foundation for being the first viable non-collateral backed stablecoin design. Yet, governance proposals and protocol changes negatively influenced its growth and did not meet the expectations of its early participants. …
To celebrate the launch of DSD V2 and the introduction of DIP-10, we believe it’s time to make yourself familiar with the new protocol dynamics. These new dynamics are crucial for the future of DSD, and everyone should know how they work, and get comfortable participating in DSD V2.
This is why we are airdropping a total of 1.000.000 DSD to 50 DSD V2 participants via a lottery system.
These 1.000.000 DSD will be funded through the team wallet, 0xF414CFf71eCC35320Df0BB577E3Bc9B69c9E1f07, DAO bonder since day one. No additional treasury minting is required, everything is 100% team-funded.
With the introduction of DIP-10, DSD has entered a new era by fundamentally changing the debt cycle mechanics holding on to its mission to become the first uncollateralized reserve asset for DeFi.
This article is more of a “practical guide” on how to participate in the protocol. For a more in-depth read on the mechanics, please check out this article.
What has changed for me as a user?
The main difference in V2 is that the coupon system has been replaced by CDSD (“Contraction DSD”), which can be obtained by burning DSD, reducing the supply.
During expansion cycles, the dynamics…
In addition to the migration of our main liquidity pool from Uniswap to Sushiswap 🍣, DIP-16 introduces updated advance incentives.
TL;DR: With DIP-16 it is always economical to call the advance() function.
En route to DIP-10, one of the major roadblocks has been the advance() function. Due to high gas costs and DSD trading below peg, it has been not economical to call the advance() function. The gas costs were higher than the DSD rewards. The failure to call the function creates two problems:
Please find a detailed step-by-step instruction on how to migrate your liquidity below.
With DIP-16 we are proposing to move the main liquidity pool from Uniswap to Sushiswap. Upon implementation, Sushiswap LPs are rewarded with DSD during expansion.
To recap our reasoning for this move:
Since @0xMaki 源 義経 is already on our multisig panel, we are now on the verge to fully move over to Sushiswap to intensify our cooperation. Sushi is showing an impressive development and we are happy to onboard the train and see long-standing benefits for our community.
Algorithmic stablecoins started with the revolutionary idea of rebasing, allowing for dynamic contraction and expansion of the total supply of coins, also called elastic supply. For the first time, rebases enabled viable non-collateral backed stablecoin designs. Direct rebasing has two main problems: it’s not composable and it’s confusing to see your wallet balance increase or decrease. The debt-coupon system employed by the most successful next generation of algorithmic stable coins improved upon the rebase mechanic by making rebases driven by market participants. The debt-coupon mechanic created voluntary elastic supply, where market participants were incentivized to contract the token supply. …
We, the founding team of DSD, want to lay out our roadmap and timeline for DSD V2 (often referred to as DIP-10).
Since January, the team has been working on finding a novel incentive structure that can overcome the inability of status quo algorithmic stablecoins to maintain their peg.
Note that the inability to maintain the peg drove most protocols to switch to collateralized designs. We believe that collateralization (including when done partially through governance tokens) brings no relevant innovation to space. …