will get to the Oracle price feed right ?
ok.. now I got it 😊 thanks! but this would mean that people selling later on their dUSD would make from today's point of view 35% loss (if people did not mint dUSD to buy it)
yeap, thats how it works when different exchanges have different rates! You can learn about arbitrage trading to understand further how you can take advantage of situations like theis
when you borrow $1000 DUSD, and the DUSD is above the price of USD, the vault will issue a negative interest rate. Which means you get free DUSD. Which also means anyone that is borrowing DUSD gets more free DUSD. This increases the supply of DUSD, which in economics theory, has a downward pressure on price. So the DUSD falls and ideally, become 1 USD. But as we all know, DEX can never be that accurate, so it might fall below 1 USD. In that case, a positive interest rate is now applied to your DUSD loan. Which then causes the supply to decrease, and upwards pressure on the price of DUSD
I was wondering why I get DUSD 😂 what a great answer. Thank you so much for your explanation
if you ever find someone in need of explaining this concept, do forward them this message and spread the word! Defichain is community based, so th more people understand, the stronger the community!!
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