Based on the feedback from the community we want to upload the Community Fund Diversification again as a DFIP in the current voting round. We are still convinced that this is a great idea! Thanks for your great feedback! In our view, the suggested idea is now way more straight forward! Let us see what is MNs point of view on the updated version:
Updated version: The Community Fund currently contains 28.5 million DFI. The major goal of this DFIP is that for future bear markets, the fund will have stable value in its assets so that countless DFIs do not have to be expended.
Furthermore, the delay between submitting and receiving CFP funding poses a significant risk for applicants, as crypto prices can be highly volatile. This can make it difficult to ensure the implementation of a project even after securing CFP funding, especially in the event of a market crash. To mitigate this risk, it is beneficial for applicants to consider holding stable or volatile assets. Keep in mind that CFP’s, which need the received amount in USD, can lead to an increased selling pressure on DFI. A solution to this is holding dUSD, as it allows for easy conversion through the stable coin pools without any added selling pressure on DFI.
The proposal outlines a maximum of 15% dUSD (measured in $) in the fund for the long-term. dUSD price is defined by the oracle within the fund. This measure allows us to capitalize on market conditions by purchasing dUSD during bull markets and holding DFI during bear markets (Assumption: DFI price increases in a bull market. If we have reached the threshold of 15% (dUSD) - 85% (DFI) and DFI price further raises, the percentage share of dUSD measured in $ decreases. Thus DFI is again swapped to dUSD. This example explains why DFI is swapped too dUSD in a bull market and the other way round). In the event of a severe market downturn, where e.g. DFI drops by 80-90%, this strategy would ensure that the fund has over 50% dUSD, providing a buffer to continue development during bear markets while simultaneously accumulating more DFI.
The generation of dUSD will be exclusively sourced from the assigned block rewards (8.34 DFI) for the fund. We have three different situations:
$0.98 <= dUSD <= to $1.02
50% of the rewards are swapped to dUSD
dUSD < $0.98
100% of the rewards are swapped to dUSD
dUSD > $1.02:
No swap occurs
It takes more than 420.000 blocks (146 days) if dUSD stays below $0.98 to accumulate dUSD to reach the threshold or over a year as soon as dUSD stays above.
How does this DFIP benefit the DeFiChain community?
The community fund diversifies its portfolio
Community members have the option to apply for dUSD through a CFP
Helps to stabilize dUSD by locking up dUSD
Adds buy pressure on dUSD
Non-obligation
I understand that vote of confidence for DFIP carries no obligations by any developers to implement the proposals. DeFiChain is a community projects. Pull requests can be submitted by community and reserved to be evaluated for safety and general community acceptance.
DFIP Overview
Describe your proposal
First, not approved version, from November2022 (DFIP 2211-A): https://github.com/DeFiCh/dfips/issues/227
Collected Feedback: https://www.reddit.com/r/defiblockchain/comments/z3ebus/feedback_on_the_rejection_for_dfip_2211a/
Based on the feedback from the community we want to upload the Community Fund Diversification again as a DFIP in the current voting round. We are still convinced that this is a great idea! Thanks for your great feedback! In our view, the suggested idea is now way more straight forward! Let us see what is MNs point of view on the updated version:
Updated version: The Community Fund currently contains 28.5 million DFI. The major goal of this DFIP is that for future bear markets, the fund will have stable value in its assets so that countless DFIs do not have to be expended.
Furthermore, the delay between submitting and receiving CFP funding poses a significant risk for applicants, as crypto prices can be highly volatile. This can make it difficult to ensure the implementation of a project even after securing CFP funding, especially in the event of a market crash. To mitigate this risk, it is beneficial for applicants to consider holding stable or volatile assets. Keep in mind that CFP’s, which need the received amount in USD, can lead to an increased selling pressure on DFI. A solution to this is holding dUSD, as it allows for easy conversion through the stable coin pools without any added selling pressure on DFI.
The proposal outlines a maximum of 15% dUSD (measured in $) in the fund for the long-term. dUSD price is defined by the oracle within the fund. This measure allows us to capitalize on market conditions by purchasing dUSD during bull markets and holding DFI during bear markets (Assumption: DFI price increases in a bull market. If we have reached the threshold of 15% (dUSD) - 85% (DFI) and DFI price further raises, the percentage share of dUSD measured in $ decreases. Thus DFI is again swapped to dUSD. This example explains why DFI is swapped too dUSD in a bull market and the other way round). In the event of a severe market downturn, where e.g. DFI drops by 80-90%, this strategy would ensure that the fund has over 50% dUSD, providing a buffer to continue development during bear markets while simultaneously accumulating more DFI.
The generation of dUSD will be exclusively sourced from the assigned block rewards (8.34 DFI) for the fund. We have three different situations:
$0.98 <= dUSD <= to $1.02 50% of the rewards are swapped to dUSD
dUSD < $0.98 100% of the rewards are swapped to dUSD
dUSD > $1.02: No swap occurs
It takes more than 420.000 blocks (146 days) if dUSD stays below $0.98 to accumulate dUSD to reach the threshold or over a year as soon as dUSD stays above.
How does this DFIP benefit the DeFiChain community?
Adds buy pressure on dUSD
Non-obligation
I understand that vote of confidence for DFIP carries no obligations by any developers to implement the proposals. DeFiChain is a community projects. Pull requests can be submitted by community and reserved to be evaluated for safety and general community acceptance.