âïžDP Design
The DP system has core components such as DP-PCV Contract Architecture, DP-PCV Settlement, and Compliance Architecture, DP-Lend Asset Loan Interest Rate and Saving Interest, DP-PCV Contract Liquidation, DP-Swap Mean Reversion Algorithm, and Stablecoin NUSD.
DP-PCV Contract Architecture
The diagram below shows the architectural design of the DP-PCV
Supported Protocol and Whitelisted Actions
The system intends to include protocol supported whitelisted assets into deposit contract. Example:
Each protocol's feature is mapped to a component, for example, savings for aave protocol.
For example, encapsulate DP-Lend's deposit action to standard PCV function: Deposit(address token, Unit256 Amount)
DP-PCV Automated Liquidation Strategy
LD in the protocol can choose the default liquidation asset; when the default liquidation asset is insufficient, the assets will be liquidated based on the ranking of current values of USD.
DP-PCV Risk Management Mechanism
Investing in the cryptocurrency market comes with high risks. Most crypto platforms do not put the risk of responsibilities on the token holders. DP has a risk management mechanism in place to protect users. Balance fund utilization rates to avoid liquidation events include:
When the utilization rate is above desired range, lower the rate by increasing liquidity, using tokens and stablecoin to repay the original loan.
When the utilization rate is below the desired range, increase the rate by providing more liquidity, lending token, and stablecoin.
DP-PCV Position Control Strategy
Components for hedging strategies include:
To return the loan, lend a portion of the tokens as stablecoin after establishing a long position.
To repay the loan, lend a portion of the stablecoin as tokens when a short position is launched.
The number of tokens in the liquidity pool and the loan should be the same, so the position is balanced.
DP-PCV Settlement and Compliance Architecture
DP-PCV Settlement
Net Value PCV
Net value represents each share's net value, which equals total asset minus debt, divided by the number of shares.
Shares
Shares update when shares are deposited or withdrawn. After each deposit or withdrawal, the net worth needs to remain the same.
Illustration
Asset into PCVïŒ10000 USDT, 1 BTC
BTC price of the day = 10000 USDT
Initial Net value = 1.0
Net Asset = 10000 USDT + 1 BTC * 10000 USDT = 20000 USDT
Initial share = Net Asset / Initial Net value = 20000
When value changes, net value reflect the change:
BTC price of the day = 11000 USDT
Current net value = ïŒ10000 USDT + 1 BTC * 11000 USDT ïŒ/ 20000 = 1.05
When more assets are deposited:
Asset depositedïŒ5600 USDT
Current net valueïŒ1.05
Additional shares = 5600 / 1.05 = 5333
Purchase of new sharesïŒ
shares = 20000 + 5333 = 25333
Net Asset = 10000 + 5600 + 1 * 11000 = 26600 USDT
Net value = 26600 / 25333 = 1.05
The net value will not be updated when new shares are purchased.
Asset Utilization Rate
The asset utilization rate simply shows how much has been loaned out in the protocol. To calculate:
Asset Utilization Rate = Total Debt Asset / Total Value of deposited Asset
Position
Positions are net assets that belong to other types other than the denomination asset. When the position is 0, the net value wouldn't be influenced by fluctuation in market movements, and the position is considered neutral.
In PCV holding, position = PCV total asset - denomination asset + denomination debt - PCV debt
Example, with USDC as denomination asset:
position = PCV total asset - USDC asset + USDC debt - PCV debt
Net Asset Settlement
Net deposit value = net liquidity value - net debt
DP-PCV Management Fee Structure
PCV creator will charge a management fee, with two options, 0% or 20%. When PCV net profit reaches a historical high, part of the net profit will be distributed to the PCV creator (LD) based on the fee option. When PCV net profit is lower than the last historical high, no management fee will occur.
DP-PCV Return
Total Return
PCV APR is the return for all asset deposits for one year.
Saving Interest
Debt Interest
Liquidity Pool Interest
Illustration
Deposit 10000 USDT into PCV, net asset become10000 USDT
Deposit 7000 USDT into AAve, and lend 3000 USDC
3000 USDC and the rest of USDT will be put into QUIckSwap liquidity pool to earn return.
DepositïŒ$7000, LendïŒ$3000
PlatformïŒQUIckSwap (USDC-USDT)
Data from liquidity pool contract
Liquidity Pool positionïŒ$6000
Liquidity Pool interestïŒ
Yield Farm Interest
This depends on each project owner. Take, for instance, if interest is 15%
Ultimately, the APR for PCV is
DP-PCV Max Lend and Withdrawal Amount
Pledged loanable Amount = Net Asset * Pledge Rate
Fund Utilization Rate = Net Debt / Net Pledged loanable Amount
DP-Lend Max Lend Amount
Constraints with 0% buffer
Condition for Successful transaction: fund utilization smaller or equal to 100%
Condition for liquidation: fund utilization over 100%
Constraints with 10% buffer to prevent liquidation from market fluctuation
Condition for Successful transaction: fund utilization smaller or equal to 90%
Condition for liquidation: fund utilization over 100%
DP-Lend Max Withdrawal Amount
Constraints with 0% buffer
Condition for Successful transaction: fund utilization smaller or equal to 100%
Condition for liquidation: fund utilization over 100%
Constraints with 10% buffer to prevent liquidation from market fluctuation
Condition for Successful transaction: fund utilization smaller or equal to 90%
Condition for liquidation: fund utilization over 100%
DP-Lend Illustration
Illustration with $40000USDC deposited under two different constraint setting
Illustration with $40000USDCã$20000ETHã$50000DP deposited, $20000debtMaticã$10000debtUSDC lended, under two different constraint setting
PCV Max Loan Amount
Constraints with 0% buffer
Condition for Successful transaction: fund utilization smaller or equal to 100%
Condition for liquidation: fund utilization over 100%
Constraints with 10% buffer to prevent liquidation from market fluctuation
Condition for Successful transaction: fund utilization smaller or equal to 90%
Condition for liquidation: fund utilization over 100%
PCV Max Withdrawal Amount
The asset is within the PCV contract, and the pledge rate is the same before deposit and withdrawal. Thus withdrawal inside the PCV contract is not constrained.
PCV Illustration
Illustration of max loan and withdrawal with $40000USDC deposited under two different constraint settings.
Illustration with $40000USDCã$20000ETHã$50000DP deposited, $20000debtMaticã$10000debtUSDC lended, under two different constraint setting
DP-Lend Asset Loan Interest Rate and Saving Interest
Funds utilization rate = value of borrowing / value of deposit
When the fund utilization rate is less than or equal to 0.8:
Borrowing rate of the current block = Multiplier_PerBlock* Funding Utilization
When the fund utilization rate is greater than 0.8:
Borrowing rate of the current block = Multiplier_PerBlock0.8 + Jump_Multiplier_PerBlock(fund utilization rate - 0.8)
Deposit rate per block = borrowing rate per block * fund utilization * (1 - margin rate)
The borrowing rate multiplier (slope) is amplified by a factor of 15 after the utilization of funds reaches 80%
DP-PCV Contract Liquidation
Total borrowed asset value will be greater than total collateral asset value in the event of collateral asset price decreases or borrowed asset value increases. The users' addresses will enter into liquidable status. Liquidators could pay back the lender's borrowed asset and gain 8% of collateral assets as an incentive, which counts as liquidation punishment for users with accounts liquidated.
Liquidation Steps
The processes involved in liquidation are:
Update blocks data
Check if the liquidator's address is different from the lender's address (they couldn't be the same)
Check liquidated asset amount is larger than 0
Check if the lender's remaining collateral assets are more than the collateral asset
Transfer collateral assets to the liquidator, calculate new lender and liquidator asset
Call auditing contract for liquidation permission
Note:
Max liquidation amount should be less than 30% of the lender's total value of the collateral asset.
DP-Swap Mean Reversion Algorithm
The Mean Reversion Algorithm is used for reducing fluctuation in token price. The incentive multiplier only applies to algorithm-based coins. When the price is below the mean, selling will be punished, and buying will be rewarded to encourage the price to get back to the mean.
X: market price/average price
Y: Incentive multiplier
Token Algorithm Governance EIP
Stablecoin NUSD
NUSD is the protocol's decentralized over-collateralized stablecoin. Users would be able to borrow NUSD by depositing authorized assets as collateral into DP-Lend contracts. This is the primary function of the NUSD. The pledge rate varies depending on the item deposited. A rigorous liquidation module will manage risk to maintain NUSD over-collateralized while minimizing risk.
The total amount of NUSD in the lending contract will be made public, and NUSD will not be released until further loans are necessary. The cost of lending NUSD on a DP Lend contract would be zero, giving users the benefit of keeping NUSD with no fees involved.
Benefit of NUSD
The use of NUSD in the ecosystem allows users to construct PCV with 0 interest cost to boost profit. Any user could lend NUSD with no min amount. Compared to the current major stable coins min amount requested, NUSD lowered the threshold for users and increased its circulation.
Stablecoin NUSD plays an important role in stabilizing the DP ecosystem. A low-interest stablecoin like NUSD is a critical component of Defi's ecosystem.
NUSD Price's Stability
To keep NUSD to USD ratio as close as possible to 1:1, the DP platform provides tools to allow users to swap NUSD to USDT with a 1:1 ratio, allowing traders to profit in the event of NUSD price diverging from USD price.
When the price is over 1 USD:
1 NUSD's price will be higher than 1.005 USDT (0.005 difference for 0.5 fees changed)
Users could use tools to swap USDT for NUSD to gain profit
When the price is over 1 USD:
Users could use tools to swap NUSD for USDT to gain profit
How to gain NUSD
deposit approved assets as collateral into DP-Lend contracts for lending NUSD
Purchase from liquidity pool or DEX
Application of NUSD
0 interest loan
Low-risk Arbitrage
More flexible strategy
Risk Control
The pledge rate of collateral assets differs based on their risk level. In the event that collateral assets dramatically decrease in their market value, the debt ratio might trigger liquidation in order to ensure over-collateralization.
Economic Model
1.DP's economic model has shifted from private placement to fair launch, reflecting community interests and expectations through decentralization, giving users greater autonomy and control.
2.DP_BOXâs mining reward model is not based on token issuance, but rather on community donations, providing more opportunities for community governance and participation.
3.DP's economic model and governance structure are jointly determined by community members, helping to protect community interests and achieve better autonomy and governance, promoting the development of Web3 networks and blockchain technology.
4.DP has partnered with Multichain to use its cross-chain technology, enabling DPC Token to circulate on multiple chains such as ETH, Arbitrum, Polygon, and BSC, providing users with more interoperability and trading convenience.
5.DP aims to ensure that all users can participate equally through fair launch and complete decentralization, not just a small group of capitalists.
6.DP's global community members are actively participating in community construction, jointly promoting the development and innovation of DP, and making contributions to the development of Web3 networks and blockchain ecosystems.
7.DP will collaborate with other Web3 networks and blockchain projects to achieve greater interconnectivity and value transfer.
8.DP will continue to promote the development of decentralization and Web3 networks, providing users with better experiences and more opportunities, and realizing a more fair and just future. 9. New Token Allocation for $DPC: 80% added to liquidity pool 10% for operations (online tasks, KOL, listing) 10% for mining rewards: ⢠3% for multi-chain liquidity mining (ETH, Polygon, Arbitrum, BSC?) ⢠1% for liquidity mining partnerships (ETH, Arbitrum) ⢠6% for PCV strategy incentives (Arbitrum, Polygon) ⢠3x leverage liquidity mining for ETH/USDC, profits converted to DPC ⢠2x leverage liquidity mining for DPC/ETH, 75% ETH used to buy DPC, 50% ETH borrowed from DPlend to add to liquidity DP_Box staking: deployed on 3 chains, rewards donated by community, balanced staking model, see docs for details. #DP $DPC #DeFi #Web3 ïŒNote: The previous token allocation method can be found at https://docs.dpcprotocol.com/dp-docs/what-is-dp-coins-dpcïŒ
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