I understand the burning of DFI if its used to

Question

I understand the burning of DFI if its used to

repay a DUSD loan, that’s positive for DFI price and gives us a dynamic tool to take advantage of a DUSD premium arb opportunity. If DUSD started trading at a discount, how would I arb that discount?

#blockchain #cryptocurrency #defichain #english

0

16.12.2021

10 ответов

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Vik901 Автор вопроса

kuegi
Two ways :if you have a dusd loan open, you choose...

Thanks a lot!, so I would simply buy discounted DUSD and repay my DUSD loan. Or I would buy DUSD (with whatever), post it as collateral at 99 cents and then I could mint a dToken. This reduces my cost of dApple… is this correct?

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16.12.2021

kuegi

Vik901
Thanks a lot!, so I would simply buy discounted DU...

Yes. Not an infinite arbitrage like to the upside, but a incentive.

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16.12.2021

kuegi

Vik901
Thanks a lot!, so I would simply buy discounted DU...

But it doesn't reduce your cost of the dtoken. If you mint it, you need to pay it back, so you don't "own" it. But it reduces your needed capital for minting. This gives a better return on invest when putting the minted tokens into LM.

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16.12.2021

Vik901 Автор вопроса

kuegi
Yes. Not an infinite arbitrage like to the upside,...

Thank you, very helpful. About the proposal, there is no perfect solution but at least it gives an incentive and tool to take advantage of the arb premium/discount. Getting DUSD to $1 is preferable as its key to the dToken take up (in my opinion). We have time to bring in a solution to burn untethered DUSD in the future, if its even an issue. A key attraction to this project (in my opinion) will be the ability to get exposure to my favourite stocks and earn yield through the liquidity pools at the same time, quite attractive. So a 1 dollar DUSD is critical in my view. We can always unwind the DFI option in the future once it all stabilises.

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16.12.2021

kuegi

Vik901
Thank you, very helpful. About the proposal, ther...

yes, the DUSD premium will be gone, but if there is still a premium in the market (which might even be gone by then cause of market dynamics), it will fully shift to dtokens. right now you pay 25% to get into the DUSD system and then 10-20% premium on the dtokens. with the DUSD peg and shifted premiums, you will pay no premium to get in, but up to 50% premium for dtokens. For me that doesn't sound like a big improvement. But i understand that a DUSD peg is important for marketing purposes If the premium is gone already in january, we don't even need a solution anyway.

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16.12.2021

Geronimo 0815

kuegi
yes, the DUSD premium will be gone, but if there i...

Well I think the premium goes down now because many users anticipate the update and are minting dUSD for arbitrage.

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16.12.2021

Vik901 Автор вопроса

I don’t see this “water balloon” analogy with the DUSD premium shifting to the dTokens. People will simply buy DUSD with whatever token. It will be fairly priced at a 1 USD. Then use DUSD to buy dApple. I don’t see how the deman/supply of dApple would be distorted with a 1 dollar DUSD.

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16.12.2021

kuegi

Vik901
I don’t see this “water balloon” analogy with the ...

What do you think how the current premium is created? And why it is a similar premium for all dtokens?

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16.12.2021

Vik901 Автор вопроса

kuegi
What do you think how the current premium is creat...

Yup there is a premium, but give it some time. Plus the preciseness of prices for dTokens will never be spot on. Give it some time. If we eliminate the distortion of DUSD pricing, I actually think it will help with pricing of dTokens. Once less variable to deal with. Right now its too messy

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16.12.2021

kuegi · Accepted Answer

kuegi

Two ways :if you have a dusd loan open, you choose it at discount which gives profit. With the additional part in the proposal, you can add dusd as collateral for a value of 99 cent. It doesn't give instant arbitrage. But you can swap stables from your vault for cheaper dusd with the same stability in the vault. So a win for you.

0

16.12.2021

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