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. Therefore, we are launching DSD, which aims to serve as a rolled-back version of ESD incorporating slightly adjusted parameters to be even more agile and respond even quicker to market demand.
Stablecoins play a pivotal role in modern crypto finance, particularly DeFi. The most popular USD stablecoins use a centralized design, meaning that the underlying stablecoin is physically backed by a centralized USD treasury. They work well as long as the centralized counterparty stays solvent.
Decentralized stablecoins are an improvement, but most rely on a collateral reserve model, which is capital inefficient and bears a liquidation risk for its users. Furthermore, collateral-backed stablecoins’ total supply is limited by the underlying reserve assets and can only respond slowly to market demand.
The ideal DeFi stablecoin would be fully decentralized, capital efficient and censorship-resistant. We, an anonymous team and strong supporters of non-collateralized stablecoin designs created DSD to do all of these things, and more.
For more technical information on DSD, check out this article.