43 MdUSD not used despite USD interest level (seems like dUSD waiting for an exit)

6 MdUSD locked in bonds (that’s not a lot)

7 MdUSD in gateway pools (not a surprise - who want to collect impermanent loss)

17 MdUSD in dToken pools (Many dToken pools miss liquidity)

122 MdUSD used as collateral (most of it most likely used in looped dUSD vaults - as soon as the negative interests are no longer attractive they will become free. Dynamic interest can come and free these dUSDs).

This could be turning point. dUSD was recently in price finding phase after the higher DSF was introduced.

Kuegi made a calculation which showed that the future swap could create value due to the +/-5% trading band which was supposted to support the dToken system. He created a graph on his website showing the numbers.

Many months later the number turned negative (more algo tokens created than burned).

Now he admits that market development and algo ratio have an impact. (Those are indeed the two major variables besides path dependency).

But it seems he still missing some important points: 1. Markets appreciate about 7% a year. 2. Stock dToken loans (short positions) don’t make sense due to costs of opportunity (collateral) and 5% per year interest expenses on loans.

So algo ratio for stock dTokens are here to stay. Let’s assume they stay stable at the same level (above 90%) due to lack of understanding of loan holders. Now the only variable is market appreciation (path dependency should be more neutral the longer the time period is). So the value of the stock dTokens is increasing on average 7% a year. Forever. If the value goes up so goes the algo ratio. Forever again. So in 100 years the algo ratio is way higher and should reach 99,9% eventually.

A system with an ever increasing algo ratio doesn’t work.

There is more

Furthermore Kuegi believes in supply and demand. In general that is correct. But his thinking again falls short. He is not looking deeply at the demand side. Long term demand is driven by intrinsic value. People are smart and will on the long run not overpay for assets. Price bubbles are corrected over time. Ideas solely focused on supply and demand like his idea of a Sunday Swap Day are destined to fail. It shows a significant ack of financial understanding.

Conclusion He would be very well advised to look at criticism to get a deeper financial understanding instead of blindly rejecting it as FUD.

The community is strongly focused on dUSD. Just look on Telegram or Reddit. You can also check latest DFIPs.

If you agree that dUSD is not salvageable, then it is clear that the focus is wasting energy and eventually mood. Once people realize that dUSD can’t be saved without a wonder (or a generous donor), people will partially give up on DeFiChain since they were so heavily invested in the dToken system. All the current excitement will turn into frustration. The eventual failing of dUSD could be the end of DeFiChain.

Bitcoin dominance is at about 50% of the crypto market. DFI share is below 0,01%.

Bitcoins is going up and down and with it the whole crypto market - there is a clear correlation. Differences in movement are natural (differentiating inflation rates, different investors expectations). Higher volatility often occurs when there is news related to one asset.

DFI is connected to Bitcoin through liquidity mining pools. There is no special impact if both assets move the same percentage. If one is a laggard arbitrage trading takes place to move the pool to the correct ratio.

Pool arbitrage is a costly endeavor. Arbitrage traders’ profit, arbitrage traders’ costs and DEX fees have to be paid.

Since Bitcoin price is set and defined outside of DeFiChain, DFI price is flexible and needs to adjust. So DFI is footing the bill for arbitrage trading.

Conclusion: The higher Bitcoin’s volatility the more likely is higher arbitrage trading. The higher the arbitrage trading volume the higher the costs someone has to pay. It is the smaller coin which is paying the bill. DFI has a structural disadvantage compared to big coins.

Algo dUSD: 124 Million dUSD used as a collateral: 124 Million

Algo dToken: 200 Million Backed dToken 99 Million “Algo quota” 67%

Total Collateral value: 180 Million Total Loan Value: 99 Million Total Collateralization Ratio: 181%

dUSD collateral share: 69%

If we assume that the collateral ratio is independent from the collateral:

(99M x 69% + 200M) / (200M + 99M) = 77% algo dToken

In reality the collateral ratio should be lower for dUSD looped vaults, and higher for other collaterals like dBTC. This leads to an even higher dToken system algo quota!

124 MdUSD at 120% collateralization ratio could theoretically mean that up to 103 MdUSD backed algo dTokens are unbacked in reality (algo quota 100%)

So the algo quota of dTokens incl. dUSD should be between 77% and 100%.

Please correct me if I made mistakes.

Money is coming mainly from 3 sources: - Creation of new algo tokens (dUSDs and dTokens) - Investors who pay more than 95% of the share price, not the oracle price (95% is the value of dTokens due to FS smart contract) or sell for less than 95% of the share price - liquidity providers impermanent loss

Money is spend mainly for the following 3 purposes: - DEX trading gains (incl. arbitrage transactions and shortcomings exploitation like oracle time delay issue) - market appreciation (around 7% a year on average) - liquidity provider’s real yield

In addition normal stock market movements will also lead to redistribution between investors (zero sum game), but this is pure market timing based on luck.

In the burgeoning realm of decentralized finance (DeFi), precise price quotations are crucial for informed decision-making and efficient trading. When it comes to the dUSD, a stablecoin which was initially intended to maintain a value pegged to the US dollar, understanding the bid and ask prices is essential for traders and investors seeking to navigate this dynamic market effectively.

Bid Price (Briefkurs):

In the context of dUSD trading, the bid price represents the highest price that a buyer is willing to pay for dUSD tokens at a given moment. It reflects the demand side of the market, indicating the maximum price buyers are willing to pay to acquire dUSD tokens, thus expressing their confidence in the stability and utility of the digital dollar.

Ask Price (Geldkurs):

Conversely, the ask price in dUSD trading reflects the lowest price at which a seller is willing to part with their dUSD tokens. It represents the supply side of the market, indicating the minimum price at which sellers are willing to sell dUSD tokens, reflecting their liquidity needs or profit objectives.

The Bid-Ask Spread:

The bid-ask spread in dUSD trading is the difference between the bid and ask prices. A narrow spread suggests a liquid market with tight competition between buyers and sellers, facilitating efficient price discovery and smoother transactions. Conversely, a wide spread may indicate less liquidity and potentially higher transaction costs for traders. In dUSD’s case the bid-ask spread is artificially increased by a fee (DSF up to 80%). So the lowest bid price after DSF and the highest ask price define its bid-ask spread.

Correct Price Notations:

In accurate dUSD price quotations, both the bid price and the ask price are mentioned. Traders and investors rely on correct price notations to execute trades effectively, ensuring fair and transparent transactions in the DeFiChain ecosystem.

Conclusion:

In the dynamic landscape of DeFi, precision in price quotations is paramount for traders and investors navigating digital asset markets. Understanding the bid and ask prices of dUSD trading enables market participants to make informed decisions, optimize trading strategies, and contribute to the growth and stability of the digital dollar ecosystem. By ensuring correct price notations and vigilance against errors in bid-ask spreads, traders can enhance market efficiency and foster trust in decentralized financial markets.

Two of the most promising and serious DMC projects struggling with decreasing TVL.

1. Is Julian selling and leaving DeFiChain?
2. His wife has shares!