Thread by @mkuegi

Why I am so bullish on $DFI:
After the update you can make a vault with 100% DUSD collateral. So you can earn 66% APR on a stable coin. short Thread on how and the effects of this.
A short #roadTo50 🧵 /1

based on 10k DUSD->
* put 6.6k into the vault
* mint $3.3k SPY
* put the SPY with the remaining 3.3k DUSD into LM
-> you get 100% APR on $6.6k
-> 66% on the 10k DUSD

(SPY would need to pump 30% to get your collateral into trouble, so plenty of time to react)
/2

This will definitly attract new capital, which doesn't care for $DFI but for returns.
But to get to DUSD, you need to go throu DFI. It either gets minted (with DFI as collateral) or they buy it for DFI.
/3

Assuming all of them only swap into DUSD (so doing a USDT->DFI->DUSD swap), this would create massive buy pressure on the DFI/USDT and DFI/USDC pair. The according sell pressure on DFI/DUSD is covered by the burn -> its not canceling out, but generating upwards force.
/4

How much capital might flow in? Lets say we got inflow until we reach 30% APR on DUSD. This needs the TVL in dToken pools to double. So another 145 mio. due to collateralization ratios this means a needed inflow of > $200 mio. /5

but DFI/USDT and DFI/USDC combined has a liquidity of only 22 mio -> throwing $100mio into USDT at once, would shoot $DFI to $900. Yes, wont happen like that, but it gives you an idea of the magnitude.
/6

So if we get that inflow, 2x of $DFI is not unrealistic, but this would pump up the rewards again (since they are in DFI) which would restart the circle.
/7

truth be told: Doing the actual numbers makes me even more bullish on $DFI now.

but not financial advice of course.
/n