Adaption of DUSD locks

[Graciaho]

DFIP Overview

1. Requester(s): u/kuegi
2. Reddit discussion thread (optional): https://www.reddit.com/r/defiblockchain/comments/12ifc69/adaption_of_dusd_locks/

Describe your proposal

I would like to propose an adaption to the originally formulated DUSD Lock Pools. The basic idea of the pools were "DUSD-bonds": So locking away DUSD and receiving interest (in DUSD) for it. To prevent any need of dev-resources (so they can focus on DMC) we adapted the original idea with the goal of not needing any dev resources. This lead to the idea of special pools (using existing LM-logic) which changed the rewards to DFI.

Since the original goal of not needed dev resources wasn't realistic in the end (due to ops risk of having millions in an off-chain bot), the implementation was postponed until DMC is done.

Now we are close to DMC being ready, so IMHO it makes sense to reevaluate and adapt the DUSD locks back to the original idea.

To prevent any misunderstandings:
If this DFIP is approved, it changes the previously approved DFIP.
If this DFIP is not approved, the previously approved DFIP will be implemented without change.

goal of already approved DFIP:
Lock 30-60 mio DUSD (capped at 100 mio) into these locks to remove them from circulation. This strongly reduces the effective algo ratio and drives demand for DUSD. Both will create a strong support for the DUSD price.

recap of approved DFIP:

• DUSD can be locked into special pools which are not tradeable
• pools pay rewards in DFI, taken from the normal dToken rewards
• rewards capped to $16 (in DFI) per block in total
• there are 2 pools: 1 year lockup and 2 years lockup.
• reward distribution 3/8 to 1-year, 5/8 to 2-year
• early exit criteria based on algo-ratio

proposed adaption

• DUSD can be locked into a SmartContract (preferred on DMC, otherwise native in consensus)
• rewards are in DUSD
• for rewards we use the DUSD from the "unused-rewards" part of the BBB. (DFIP-2211-B: Use currently free DFI block rewards to maintain a constant buy pressure on dUSD #228)
• rewards are capped to 20 DUSD/block in total. at current prices we have 13 DUSD/block
• no change to ratio of distribution, lockup periods or exit criteria

How does this DFIP benefit the DeFiChain community?

using the "unused-rewards" would not be possible without a code change (or DMC), but since we have dev-resources now, it makes more sense to use those for the long-term lockup. This way we have more flexibility to move the LM rewards back when appropriate.

paying the rewards in DUSD is closer to the original idea of DUSD-bonds and also allows us to keep the buy-pressure on DUSD from the BBB as it is right now. The BBB would just send the result (up to 20 DUSD per block) as rewards to the SmartContract instead of burning it. Any excess DUSD is burned as before

As soon as we can transfer DUSD to DMC, this could be implemented as a normal SC on DMC (rewards would not be distributed automatically but need to be claimed, as its standard on EVM). This would mean no needed update in the defichain core which means faster dev cycles and showcasing the utility of DMC.

If we can implement it on DMC, it also means no needed change in LW or Ocean code, as it will be just a standard DMC SmartContract.

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.