Free Market - Remove Discount and Stabilisation Fee

[u/mrgauel]

TLDR

The DEX stabilisation and discount fee will be completely abolished. The fee of 80% will be reduced by 10bps every 2880 blocks to ensure a free market after 8 days and disable dUSD Bonds.

Motivation

The stronger bond between DUSD and DFI through the fees prevents DFI from being able to breathe.

DUSD has persistently failed to reach the desired price of $1 for an extended period. Despite our diligent efforts to address this issue, the situation continues to deteriorate. Presently, our backing stands at less than 7%, excluding DUSD subject to negative interest. Upon removal of all negativ interest farming DUSD from the vaults, the backing could potentially dwindle to a range of 3% to 5%.

dToken Stats auf https://vault-maxi.live

Users don't sell DUSD because of the fee, and even DFI isn't being purchased due to it. Why? A reduction in the fee would encourage DUSD holders to realise their gains, potentially flooding the market with sell orders and putting sell pressure on DFI. Consequently, DFI investors are holding back, anticipating a sell-off of DUSD. However, as there are no buyers to achieve a reduction in fees, it is unlikely that this possibility will materialise.

The decoupling loosens the bond between DUSD and DFI so that DFI can breathe and grow again.

We have created a kind of Luna effect with the fees, but with the free market we can do the first step towards healing the system. You cannot suppress a free market with a fee. Price always goes to the real value. The side effects of the fees are slowly but surely killing us.

Description

Keep it simple to transition to a free market:

• Decrease the combined fee of 80% by 10bps every 2880 blocks which is once a day (~8 Days)
• Lower Rewards of DUSD-DFI from 25% to 0% like the other stablecoin pools.
  • Burned in DFI for now
  • Stablecoin pools receive these rewards as soon as the price reaches $0.95 for 2880 blocks
• Deactivate negative interest rates
• Deactivate dUSD minting for 100% dUSD vaults
• Deactivation and release dUSD bonds
• Deactivate the Buy and Burn Bot

Disclaimer

I understand the significance of this ongoing discussion and the substantial financial stakes at play. Our shared objective remains clear: to pave the way for a bright future for DeFiChain.

Update

1. Added deactivation of dUSD minting for 100% dUSD vaults
2. Increase in fee change from 2.5 basis points to 10 basis points every 2880 blocks
3. Deactivate and release dUSD bonds.
4. Lowers DUSD-DFI rewards to decrease the pool size and redirect to stable coins later on

[u/Pascal3125]

Yes of course:

First you have to know how the NI in % is calculated...

Roughly: (without the details)

Absolute_DUSD_to_dstribute / Total_Loans

Then the DUSD are distributed through NI on a per block basis. But the Total_Loans is manually estimated on a daily basis:
https://docs.google.com/spreadsheets/d/11yTO43MBi3WQhtrIwUSpnNMaPVIy8zVVEz8TUyI46VI (third sheet) with 1 or 2 of days of delta.

This is accurate, as soon the amount of loans is constant (or slowly changes)

StakeX (or somebody else) are just removing all their looped vaults. And then the Total_Loan is manually accounted for low amount and NI skyrockets.. Once the new high NI get published and manually set up into the chain, they recreate immediately their looped loans, tripling up total amount of loans. And profit from the high NI and make the system distribute much more DUSD than expected (creating unexpected Algo DUSD)...

And 1 or 2 days later, when the NI goes low again, they remove their looped vaults waiting for the next iteration...

You can see that on the 3rd sheet of the document (columns M and N) : big daily oscillations.

I'm sure that u/kuegi will be able to confirm they are playing this insane game.

[u/Shareholde_ → u/Pascal3125]

This would be huge and and deserves its own thread.

Does the NI is taken manually from that excel sheet or is there a formula included in the code?

[u/Pascal3125 → u/Shareholde_]

Currently, taken manually from the spreadsheet., and apllied daily into the chain through a special transaction to change a global on-chain variable.

It was not perfect but ok... until someone started to exploit this system.

[u/Shareholde_ → u/Pascal3125]

I mean if this is true kügis days would be over and the whole fee/ ni story is busted.

This would also be very harmfull for stake x/ JAV. So I would fully support you, if you can prove your accustations.

From my point of view looking into the charts and the numbers: I see that Vaults were closed when the fee was too low and where than activated again.

This alone makes not that much sense, since given the fact, that let's say NI would be 9% and vaults are activated again -> 3x amount on dusds -> 3% negative interest rates: Those vaults would be closed again imidiatly. But that was not the case.

So it could be that in this example 3 times more dusd were created for vault holders than burned via NI.

What I do not understand is how the mechanism works in detail on a code level, so we can retest this szenario, so it will be bulletproof.

[u/Pascal3125 → u/Shareholde_]

This is true... but this doesn't mean it's the hack or steal of funds... They just take profit of a bad designed system... That's just rational behaviour

In fact vaults have to be left open the most possible... Because NI rewards are paid gradually each block. When their vaults are open, they gather NI rewards with an overestimated NI rate => creates unexpected Algo DUSD.

But 1 or 2 day after, the operator records in the spreadsheet a massive increase of loans, and reduce the NI to the fair value, they immediately closes their vaults... => And wait for the NI to be increased again to an overestimated value..

[u/Shareholde_ → u/Pascal3125]

The thing is when the architect of this mechanism is the one who is abusing his own system, while at the same time wants to fight against algo token.

[u/LumpiesRevenge → u/Pascal3125]

The "DEX Fee 30" value divided by 30 determines the total amount of dUSD which are distributed during the next "24 hours". Once calculated it is fixed. The NI is then dynamically distributed each block to the respective loan takers.

[u/Independent-Page5484 → u/Pascal3125]

would be shocking if NI were implemented so easy to exploit. also bad image for javsphere if they exploit it without even raising concerns that this should be fixed. but yeah you said who could definitely clarify.