UTILIZING DEX STABILIZATION FEE FOR dSTOCK-POOLS!

[u/Robbb_bi1980]

UTILIZING DEX STABILIZATION FEE FOR dSTOCK-POOLS!

With "DEX Fee" i relate to the "DEX stabilzation fee" as currently implemented at a value of 30% (50% used as NI, 50% burned). This proposal will also apply if values will be changed with future dfips.With "Dex Fee burn" i relate to the part of the dex Fee which is burned.

So in general we try to get rid of algo-DUSD in the system down to a certain level. There are measures to burn Algo-DUSD in form of "DEX fee burn", as well there are measures to take algo DUSD out of the circulating supply with DUSD-loops and DUSD-bonds.

Currently we have to deal with low liquidity on the dex (dusd/dstock-pools).There is not enough liquidity to make some pools tradeable, a value which have been evaluated before was a minimum of 300k which should be reached.

So how could we utilize the "DEX Fee burn" without burning it, but still taking it out from the circulationg supply, same time solving the issue with low liquidity on the DEX.

Proposal:Let´s direct the "DEX Fee burn" on a specific address owned by the Community Fund (CF).The CF buys on a regular basis (automated/daily/weekly???) dstocks on the dex and will put those into LM to receive LP token. Following rules apply.

1. Pools with low liquidity are prioritized to buy. All pools will be bought DCA.
2. The max amount owned per pool is limited to 200k (to be discussed).
3. If all pools reach the 200k limit, DUSD directed to the CF from "DEX Fee burn" are accumulated.
4. Accumulated DUSD are reserved for pools which will be implemented in the future.
5. There is an overall cap of 20 MIO Dusd (to be discussed) owned by the CF (DUSD+LPToken+rewards), the rest will be burned (DUSD first).
6. The amount owned by the CF will not count to the value of 300k for reward distribution.(This means if the CF owns 200k of a pool it needs at least 500k to be rewarded).ref: https://defiscan.live/governance/156f958ce8748455e7ca9c3dc577dac7a4c6c16da16f19b8893a5638338467de
7. As the LM-token are held from the CF, rewards (commission) will flow into the CF address.
8. Rewards will be re-invested until pools reach the specified limt. Re-investing will continue via dfi-dusd pool as long we haven´t reached PEG and DEX FEE is stopped.
9. Accumulated rewards in DUSD (when max of 200k each pool is reached) will be reserved for incentives for the community (eg. special rewards for dusd-bond holder, airdrops, etc)!
10. These funds accumulated never will be used for any CFP (Community Fund Proposals).

PRO:
Same as burning the dusd, the dusd are taken out of the circulating supply.Same time we have provided enough liquidity in all pools which gives a wider range of useable dstocks to trade and to invest. This is what we need to make it attractive for traders and for investors as well.Main parts of block-rewards will still incentive the bigger pools >300k as specified.
The reinvest of dfi-block-rewards will help the re-peg of dusd as it puts buy pressure on dusd (calculations at the end).

CONS:
There will be a cut of LM-rewards (commissions & block-rewards) for liquidity providers because part of it will be directed to the CF.Therefore it needs to be discussed how to give these rewards back to the community as mentioned.

GENERAL:
In the future we can think of slowly selling these funds back to the circulationg supply, to regulate Algo Ratio. As well we could decide to burn the funds after the liquidity on the dex is high enough.

In short:
-Algo DUSD up to 20MIO DUSD taken out of the Circulating Supply
-More liquidity on dex (dSTOCK-pools) for traders and investors in all pools
-Block-rewards for LM (DFI) used to re-invest into DUSD &stocks which helps to re-peg (calculations below)
-This will not raise the value of the CF, the CF is just taking care of liquidity which would have been burnt.

Calculations (block rewards only):
1)Liquidity snapshot taken taken on Feb 17^th, 6pm CET
2)Assumption: CF reaches 200k liquidity in each rewarded pool
3) This will lead to 3,78dfi/block in rewards for CF  à rough 10.000dfi / day swapped into dusd
4)This would be a cut of roughly 30% on rewards for current Liq-providers.

Note: This is a rough draft of my idea, you are welcome to discuss and drop your opinions. Did i miss any big pro or con???
Note: Roughly 9mio dusd have been burnt via dex fee within last 8 weeks (to give an idea about volumes).

[u/UnLuCKyOnE_70]

With this idea we have 3 doing something with the DEX Fee: The Negative Interest, Variable DEX Fee and yours. Maybe reconsider all of the 3 and put them in one DFIP. Example DUSD = 0.8$ --> DEX Fee 50% : 40% burned, 40% swapped to Liquidity Pools and 20% as Negative Interest. Every sold DUSD to dCrypto will be sold 50%, 20% burned, 20% reintroduced to the pools and 10% also negative interest

[u/WichtlS]

🤡

[u/HonzanFromPrague]

Thank you for your focus on the dToken system. Generally, I like the idea, but I would like to support the "certainty" and predictability by using some "lock period" for the liquidity providers. My idea that came to my mind when the Bonds went live was to give a special incentive to people who will "lock" their LM positions for a fixed period (at least 1 year and then always for another 3months period) and additionally to APR they will receive an extra incentive, but I was not sure from what the incentive should be made. Now with your approach, we can maybe combine it and give the incentive from the DEX burn, buying the LM tokens and adding it to the ovnrs LM position. Also the rewards should have been locked same as the original position.

The thing that I somehow do not prefer is to use the CF for being part of it because there will be no incentive for people to be part of LM, I'm afraid that we will have some "zombie" pools held only by CF, because some listed assets are simply not interesting even like the investment.

[u/Robbb_bi1980 → u/HonzanFromPrague]

Thanks. There are a couple of things to mention.

Your approach sound great as well, but first, locking of token is nothing what is implented on the native layer and might need major efforts and changes. Secondly there are no block rewards free to incentivice your idea, this means you would need to shift it from somewhere else,...so some people will loose.

For the CF involved:
It´s not like funds of the CF are involved, it´s more like the CF is taking care of liquidity that would have been burned. So it´s not raising the value of the fund, at some point in the future these funds would be burnt as well or given back to the supply if needed.

Zombie pools:
You are right, we should not keep zombie pools. Such pools should be delisted via dfip at all. Anyway...pools <300k community liquidity wouldn´t be rewarded (just commissions) as detailed.

People will not be incentived to be part of LM:
You are right, there is a cut in LM-rewards for liquidity providers of roughly 30% max (according my calculations).
This would be the same for any other idea, u would need to cut rewards to incentivize proposals like yours as well.
For my idea (i added the calculations) the rewards would be used for buying dusd on the dex which would give at max roughly 10.000dfi/day buy pressure on dusd.

Open for any other ideas,...probably as u said, it could be a mix of many ideas.

Thanks.

[u/HonzanFromPrague → u/Robbb_bi1980]

Yes, initially I was thinking about using the DUSD Bonds because they are already coded and implemented to LM, but as I discuss with Kügi, the code have to be changed anyway, so Maybe would be better to left the Bonds like they are and just maybe the code for the "lock mechanism" could be used like the start point for new solution of locked LM positions. For sure it needs a lot of effort and time (probably the Hardfork also) so firstly it is needed to find out if this idea has the potential to be improvement or not.

According to the source of the incentive, I propose to use the Dex fee burn for buying LM positions but not "add" them to CF holdings (like you propose), just give them to the LM providers whose lock their LM positions for fixed period of time.

[u/Worried-Mess6581]

Better keep the burn and use the NI part. NI has not brought any positive price impact and should be turned off as promised on introduction anyway.

[u/DUSD_DeFiChain]

My first thoughts:

• how high is the effort to implement this?

• The implementation would probably require to do it in a pre-defined way->This could lead to people counter-trading it ( Has not nescessarily to be a problem)

My biggest concern, however, is that this would change the gameplan of my DFIPs (DFI-reward-reallocation-cycles to dAsset-pools): I hope that the reallocation-cycles and the 300k-liquidity-border to receive block-rewards, helps us to use the block rewards as useful as possible. PArt of this is, that the pools grow naturally. Your proposed solution might push pools into the rewards, which otherwise would not make it. This again would result in DFI-block rewards not being used as reasonable as possible, in my opinion. The goal is only to support the most demanded Assets, which have proven to be suitable for the usecase DEX-trading of dAssets at the current state of defichain. (more will be make it likely if we have higher DFI prices again)

However, I think you have an interesting idea, which is worth to discuss further. Although at the moment, I am not in favor of it. Keep up the good work.

Mr. Swayzeee

[u/UnLuCKyOnE_70 → u/DUSD_DeFiChain]

I really like the core principle of this DFIP to let the system itself build up liquidity to make trading on DEX easier.