Thread by @0xRafi

1/ $DFD, @defidollar, dusd.finance. This is a project that i've mentioned over the last few days and that I believe is massively undervalued (~$10M market cap) and deserves a lot more attention.

2/ @defidollar offers a risk-insured stablecoin layer for DeFi. It does this through $DUSD, a stablecoin backed by an index of stable coins and leveraging on DeFi building blocks to ensure a $1 peg is maintained even if one of the stablecoins in the index loses its peg.

3/ So let’s take it step by step. Supported stable coins (DAI, USDT, USDC, sUSD…) can be posted as collateral to mint $DUSD and are provided as liquidity for yield generating DeFi products (such as @CurveFinance, yearn or $AAVE). And here is where the interesting stuff begins…

4/ The yield generated is not shared among all $DUSD holders, but it is used as incentive for users to post $DUSD (and $DFD) as insurance collateral to maintain the $1.00 peg for $DUSD in case any of the underlying stable coins loses its peg.

5/ So users simply holding $DUSD in their wallets will earn no yield but will have the benefit of a stable coin with an extra layer of security against losing its peg, while stakers will earn higher rewards but take higher risks in acting as an insurance layer for the system.

6/ As an example, if a total 10M $DUSD is minted, but only 2M are staked as collateral, these 2M coins will earn the yield generated by the entire pool of $10M in underlying stable coins, giving them a sizeable incentive to take the extra risk.

7/ In practice, @defidollar uses @chainlink oracles to push price updates to their smart contracts and if any of the underlying stablecoins slip from their $1 peg, then the protocol calls onto the staked reserve to guarantee the outstanding $DUSD and bring it back to the $1 mark.

8/ Staked $DUSD and the associated yield revenues (from the underlying DeFi protocols + DefiDollar platform fees) are represented by $ibDUSD tokens (interest bearing DUSD) which are freely transferable, similar to yearn’s y tokens.

9/ So what about $DFD?
$DFD is the governance token used to vote on platform parameters such as the allocation of project revenue and reserves, and $DFD can also be staked to receive a share of the protocol income through $ibDFD while acting as an extra insurance layer for $DUSD

10/ $DFD is currently being distributed to liquidity providers on @BalancerLabs, @SushiSwap, @Uniswap and @CurveFinance, as well as to the $DFD staking pool. Protocol income is shared 50/50 between $ibDUSD and $ibDFD staking pools.

11/ $DFD has a 100M max supply o/w 11.9M in circulation. Team and advisors tokens (23%) are subject to a 2m cliff + 36m linear release, seed investors / early supporters tokens (11%) are released over 24m and 32m respectively, and staking rewards (51.5%) are released over 36m.

12/ The core-team includes 3 former MATIC team members and Co-Founder & CEO Arpit Agarwal is the former MATIC technical lead and a former @Google employee. Smart contracts passed multiple audits by @Quantstamp, @peckshield and Monoceros.

13/ Now that the basics are out of the way, let’s get to some of the majorly bullish stuff:
$DUSD lending is already live via cream/yearn, and a dusd3crv pool is also live on Curve. These are major integrations considering the current $10M market cap and 12M $DUSD in circulation.

14/ The team has also just announced @defidollar is working with @BadgerDAO to build interest-bearing badger BTC (ibBTC) which will be backed by Badger sett LP tokens. The ambition here is to build a yUSD equivalent for BTC that would become the default BTC coin on @ethereum.

15/ And another innovative product being developed by the team is OptionsCoin. This will allow the issuance of stable coin loans collateralized by assets + corresponding put option (the right to sell the collateral asset at a certain price before a certain date)

16/ As an example, if ETH is worth $1700 and a user wants to borrow $1500 against it, they will deposit the ETH as collateral + pay for the options premium.
If ETH price goes below $1500 the option is exercised and the loan is liquidated for the exact price of $1500.

17/ This could open the lending market for more illiquid collateral assets (since options settlement is guaranteed on-chain) and also allow for a higher loan percentage compared to collateral, as there is less need for large buffers for liquidation execution.

18/ The team is working with @opyn_ to create $OPETH, a tokenized ETH + Put., so users will be able to borrow DUSD/USDC against $OPETH as collateral. As with the remaining platform fees, the fee revenues from OptionsCoin will flow down to $DUSD and $DFD stakers.

19/ In terms of competition, the closest project to DefiDollar is mStable (thanks @CryptoMessiah for the heads up), although notably mStable doesn’t rely on the same “insurance pool” mechanics as $DUSD, and mStable’s gov token $MTA has a $70M mktcap, so over 6x $DFD’s mktcap

20/ So there you go guys, I hope my bullishness on this project is easier to understand now!
With an actual useful product, a live fully functioning platform and the existing and upcoming high profile partnerships and products, it’s crazy this is only a $10M market cap project.

21/ Some useful links:
- OptionCoin Medium: link.medium.com/O61Mq1zzwdb
- Project presentation and FAQs: docs.dusd.finance
- Medium: medium.com/defidollar
- Dune Analytics stats: duneanalytics.com/sid_31/defidol…