The high negative interest rates made it very attractive to take a DUSD loan to generate a basicaly risk free return. The intented reason to grant high returns was to attract DFI to be locked in vaults. The original usecase for the DUSD is to build a settlement coin on the defichain without the volatility of the native DFI-Token.Meanwhile the actionable value of DUSD is - for a main part - to generate high risk free returns on „loans“ by depositing a few DFI in a vault and taking a loan in DUSD, putting these DUSD in the vault as well to take an even higher loan and so on until the DFI-vault-ratio drops to 50.01 % and maximise the loan and putting the DUSD in the vault as a safety margin. This is not intended!To countersteer this developement we have to change the vault regulations for DUSD-loans:„DUSD is no longer allowed as collateral for DUSD-loans. In vaults with just dAssets as loan DUSD remains in place as collateral. Minimum 66.7 per cent of DFI is required as collateral for DUSD-loans.“
for technical reason the headline had to be reduced to "DUSD collateral not allowed for DUSD-loans"
After approval of the DFIP the new regulation should be implemented at a good pace to force the demand of other collateral (hopefully mainly DFI to increase the demand – and the price). Therefore every 2880 blocks the value of DUSD in vaults is reduced by 10 cent. There is no reason for a generous transitional arrangement, because loans can be paid back if someone has no additional collateral on hand.
The additional adjustment to a 2/3 DFI requirement should prevent just a reallocation from liquiditymining pairs into a vault, because that has not the intended effect as well.
edit after further diskusion:
Some people don't like the change in the DFI -requirement from 50% to 2/3 - Because the main point is the DUSD ban as collateral I deleted this part .
How does this DFIP benefit the DeFiChain community?
Describe how do you think this DFIP could potentially benefit the DeFiChain community
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
The high negative interest rates made it very attractive to take a DUSD loan to generate a basicaly risk free return. The intented reason to grant high returns was to attract DFI to be locked in vaults. The original usecase for the DUSD is to build a settlement coin on the defichain without the volatility of the native DFI-Token.Meanwhile the actionable value of DUSD is - for a main part - to generate high risk free returns on „loans“ by depositing a few DFI in a vault and taking a loan in DUSD, putting these DUSD in the vault as well to take an even higher loan and so on until the DFI-vault-ratio drops to 50.01 % and maximise the loan and putting the DUSD in the vault as a safety margin. This is not intended!To countersteer this developement we have to change the vault regulations for DUSD-loans:„DUSD is no longer allowed as collateral for DUSD-loans. In vaults with just dAssets as loan DUSD remains in place as collateral. Minimum 66.7 per cent of DFI is required as collateral for DUSD-loans.“
for technical reason the headline had to be reduced to "DUSD collateral not allowed for DUSD-loans"
After approval of the DFIP the new regulation should be implemented at a good pace to force the demand of other collateral (hopefully mainly DFI to increase the demand – and the price). Therefore every 2880 blocks the value of DUSD in vaults is reduced by 10 cent. There is no reason for a generous transitional arrangement, because loans can be paid back if someone has no additional collateral on hand.
The additional adjustment to a 2/3 DFI requirement should prevent just a reallocation from liquiditymining pairs into a vault, because that has not the intended effect as well.
edit after further diskusion:
Some people don't like the change in the DFI -requirement from 50% to 2/3 - Because the main point is the DUSD ban as collateral I deleted this part .
How does this DFIP benefit the DeFiChain community?
Describe how do you think this DFIP could potentially benefit the DeFiChain community
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.