Idle - A way towards DIPOR tokenization

[bugduino]

Classification Hi there! We're two teammates (@bugduino front-end/blockchain dev and @panteo92 financial analyst). We're looking forward to find other teammates (UX/UI or another front-end / solidity dev would be great) (@lucaguglielmi , UI/UX designer, and @samster91, front-end dev, have been added).

Project Idea

The project' aim is to develop a platform that allows to reduce volatility on interest rates among the money market on Ethereum. We want to reduce interest rates fluctuations and optimize profitability when lending crypto assets by seamlessly yielding the average rate offered by various lending protocols (Compound v2, Fulcrum initially).

We plan to mint different assets (maybe ERC777) which could inherently rappresent some of the following cases:

• DIPOR_DAI => 50% cDAI + 50% iDAI
• DIPOR_USDC => 50% cUSDC + 50% iUSDC
• DIPOR_USD => 25% cDAI + 25% cUSDC + 25% iDAI + 25% iUSDc

By holding these assets you are entitled to redeem an ever increasing value of the lended token at any time.

Team

@bugduino @panteo92 @lucaguglielmi @samster91

We took part in the Ethereal Virtual Hackathon: a very first version of the previously submitted project can be found here (we have been working on it for just a couple of days), but we're currently working on a different and more definitive version, with a revised UI and mainnet operability which will be published soon.

We're two Italian guys, friends from highschool, that found themselves passionate about blockchain finance applications, Ethereum and the new DeFi/OpenFinance world. We've been working together for the last 2 years, initially on automated arbitrage bots on different markets (both CEx and DEx) and then in the Defi space.

Ways to Expand

Citing TheBlock:

"As the blockchain-based Open Finance movement continues to build momentum and analogous products — loans, interest rate swaps, total return swaps — start to proliferate, it is becoming increasingly necessary for a similar, market-driven benchmark interest rate to emerge. Further, this market-driven benchmark interest rate can provide valuable insight to top-down committees, like MakerDAO’s stakeholders, when determining how to set interest rates within their own ecosystems. Accordingly, The Block presents DIPOR — the Decentralized Inter-Protocol Offered Rate."

DIPOR is also used in LoanScan to compute the 24-hour period Volume Weighted Average Borrow rate on Compound and MakerDAO.

With idle, we want to offer a sort of DIPOR (Decentralized Inter-Protocol Offered Rate) tokenization, that allows users (particularly those that have idle capital in DAI or ETH) to earn interest from the entire money market and not just from one lending protocol.

Eligible Bounties

• https://github.com/ConsenSys/Beyond-Blockchain-Relay/issues/2
• probably others once published

[snaketh4x0r]

so decentralized libor if you have a finance guy,count me in. I can help on solidity,vyper contracts. @bugduino

[panteo92]

yep, I guess that is more tokenized libor than decentralized in this case, cause users can own a share of DIPOR and earn an avg interest (proportional to the invested capital)

Help with Solidity is always appreciated :) Let's keep in touch with Discord!

[papealioune]

Hi, I can help for react, solidity, truffle and mocha (testing). I'm not expert but we can growth together..

[bugduino]

Hey @PapeAlioune reach us at #idle channel on Discord

[papealioune]

@bugduino Done!

[writeprovidence]

Hello, I can help with Ui/ux design

[papealioune]

I got an project for decentralized exchange for African countries. Are you willing to join my project. I have already done the ERC20 smart contract token and the Exchange smart contract. Let me know.

Le mar. 25 juin 2019 à 20:35, Emmanuel Jacobson notifications@github.com a écrit :

Hello, I can help with Ui/ux design

— You are receiving this because you were mentioned. Reply to this email directly, view it on GitHub https://github.com/gitcoinco/beyondblockchainteams/issues/12?email_source=notifications&email_token=ALKO4JULUSZA6QNTPMVFBEDP4J6RNA5CNFSM4H26ELTKYY3PNVWWK3TUL52HS4DFVREXG43VMVBW63LNMVXHJKTDN5WW2ZLOORPWSZGODYRQPLQ#issuecomment-505612206, or mute the thread https://github.com/notifications/unsubscribe-auth/ALKO4JQY2UFERV6ZLCDY3V3P4J6RNANCNFSM4H26ELTA .

[owans]

Would you guys need a backend NodeJS dev?

[bugduino]

@writeprovidence we were desperatly in need of a ui/ux designer but we managed to finally found one yesterday! @owans sorry but we have now the full team of 4 members formed! We will publish the last two members soon.

[owans]

cool. Thanks

On Wed, Jun 26, 2019 at 8:46 AM William Bergamo notifications@github.com wrote:

@writeprovidence https://github.com/writeprovidence we were desperatly in need of a ui/ux designer but we managed to find one finally! @owans https://github.com/owans sorry but we have now the full team of 4 members formed! We will publish the last two members soon.

— You are receiving this because you were mentioned. Reply to this email directly, view it on GitHub https://github.com/gitcoinco/beyondblockchainteams/issues/12?email_source=notifications&email_token=AJTZB37GXRYBA37V3GQLWTLP4MNGJA5CNFSM4H26ELTKYY3PNVWWK3TUL52HS4DFVREXG43VMVBW63LNMVXHJKTDN5WW2ZLOORPWSZGODYSU3EI#issuecomment-505761169, or mute the thread https://github.com/notifications/unsubscribe-auth/AJTZB36AHDSBFSBHYTBVKCDP4MNGJANCNFSM4H26ELTA .

[writeprovidence]

@bugduino thanks for your feedback

[writeprovidence]

@PapeAlioune , yeah I am ready to join your project.

[writeprovidence]

I got an project for decentralized exchange for African countries. Are you willing to join my project. I have already done the ERC20 smart contract token and the Exchange smart contract. Let me know. Le mar. 25 juin 2019 à 20:35, Emmanuel Jacobson notifications@github.com a écrit : … Hello, I can help with Ui/ux design — You are receiving this because you were mentioned. Reply to this email directly, view it on GitHub <#12?email_source=notifications&email_token=ALKO4JULUSZA6QNTPMVFBEDP4J6RNA5CNFSM4H26ELTKYY3PNVWWK3TUL52HS4DFVREXG43VMVBW63LNMVXHJKTDN5WW2ZLOORPWSZGODYRQPLQ#issuecomment-505612206>, or mute the thread https://github.com/notifications/unsubscribe-auth/ALKO4JQY2UFERV6ZLCDY3V3P4J6RNANCNFSM4H26ELTA .

ready to join your project

[papealioune]

Hi @owans and @writeprovidence, you can join our project we can work together for a decentralized exchange in Africa..

[owans]

Cool. What's the project name on discord?

On Wed, Jun 26, 2019, 6:25 PM PapeAlioune notifications@github.com wrote:

Hi @owans https://github.com/owans and @writeprovidence https://github.com/writeprovidence, you can join our project we can work together for a decentralized exchange in Africa..

— You are receiving this because you were mentioned. Reply to this email directly, view it on GitHub https://github.com/gitcoinco/beyondblockchainteams/issues/12?email_source=notifications&email_token=AJTZB33LAP4ZU4CQUK4NZITP4ORBLA5CNFSM4H26ELTKYY3PNVWWK3TUL52HS4DFVREXG43VMVBW63LNMVXHJKTDN5WW2ZLOORPWSZGODYUHYNQ#issuecomment-505969718, or mute the thread https://github.com/notifications/unsubscribe-auth/AJTZB36KSEO4R3WWTNXO2VLP4ORBLANCNFSM4H26ELTA .

[bugduino]

Please @owans @PapeAlioune @writeprovidence create a new issue to discuss further details. Thank you

[papealioune]

@owans We have not created the channel yet because I would like to merge with this project https://github.com/gitcoinco/beyondblockchainteams/issues/23 please join this issues.. It is almost the same principle that aims to give Africans access to quality finance without intermediary through the Web 3.0 @bugduino okey.. Excuse me..

[panteo92]

Hi folks! Here's a new update for the project, I'll give you some introduction for a better understanding:

Before the beginning of the hackathon, we were thinking about to build a "Best Lending Rate Bot", that could allow users to automatically earn the highest yield among different lending protocols. The problem was that the rebalancing process (in order to get the best rate) would have necessarily been centralized (and custodial). After some thought, we identified in the _DIPORtoken (as described here in @bugduino' first post) a good product, which has an intrinsic low volatility (being an average of different lending rates) compared to a single interest rate. After the first brainstorm with the whole team, we found out a possible use case as a wealth management tool; the idea of a tokenizable lending rate index could be useful for wealth managers when they need to have a more predictable asset for their portfolios. Thus, the main feature would have been low volatility, and we were developing the product in this way.

Last week, we stumbled onto this article (Section 2: The Yield Seeker Basket: A DeFi Rebalancer), but the way Set does the rebalance seems still centralized. After confronting with each other, we realized that the rebalancing process could have been done in a decentralized way: in Idle, every time users interact with the platform (minting, redeeming or actually rebalancing their own tokens), all the funds pooled get rebalanced, giving all the users the best available interest rate.

[panteo92]

Project pivot The rebalancing mechanism will remain still the same as the article, so:

1. Idle, for instance, reads on-chain interest lending rates of Fulcrum iDAI and Compound cDAI.
2. If the interest rate of iDAI is greater than cDAI, Idle rebalances from cDAI into iDAI. If the interest rate of cDAI is greater than iDAI, Idle rebalances from iDAI back to cDAI.
3. Idle can contain an additional logic that is a minimum rebalance interval or minimum % threshold to reduce false positive signals;
4. Users now get the best interest rate on their DAI automatically

Here is the difference: every time a user interacts with the platform (mint, redeem), there will be an automated rebalance of the whole pool; in addition there will be an available method that allow users to rebalance the entire pool position. Users will be encouraged to rebalance their own positions, rebalancing consequently also all the others. It can be considered a sort of decentralized rebalance (or user-managed rebalance) and uses the principle of Adam Smith' invisible hand, which can be summarized as the unintended social benefits of an individual's self-interested actions (in this case, the users willingness to earn the highest yield on the market).

The smart contract returns to user wallet an amount of ERC777 tokens proportional to the user's pool share, so it's non-custodial, and users can redeem back their tokens anytime. As previously said, for every user interaction (mint, redeem or rebalance), Idle automatically checks the best available rate among the implemented lending protocols (Compound V2 and Fulcrum so far) and eventually rebalancing the pool for the highest yield.

I'll give a brief example, let's assume the user wants to use our platform in order to optimize his lending income. User sends an amount of DAI to the Idle smart contract and:

1. As first step, Idle checks the different interest rates and rebalances the entire pool, if necessary, converting the pooled tokens into the tokens (iTokens or cTokens) with highest interest rate;
2. Included in the same transaction, Idle smart contract will consequently mint idleDAI at the pool's current NAV-per-share rate (e.g. 1 idleDAI = 1 DAI initially, and then the idleDAI value will keep increasing at accrued interest rates' pace);

Anytime, users can redeem back the tokens, burning their idleDAI and obtaining the accrued interest (as well as the invested capital), rebalancing again the pool, if needed. To conclude, we believe that pivoting the project could have a broader audience (generally, BestRate is attractive than AverageRate), giving DeFi users a new way enhance lending their money.