Guide on New Vault Rules for Decentralized Loans
After the Fort Canning Epilogue update, 2 new rules will apply to loans: DUSD loans backed by any amount of DUSD collateral will be subjected to 50% DFI requirements in the vault The collateralization factor of DUSD will be adjusted from 100% to 120% Let’s deep dive into the mechanisms of these rules, and what it means for the DeFiChain community. 50% DFI Requirements for DUSD Loans Containing DUSD Collateral DUSD as collateral was initially proposed as part of DFIP-2112-A to allow for increased DUSD utility and shorting of stocks without exposure to volatility of cryptocurrency. This was a great initiative initially when there was no incentive to be minting DUSD by backing DUSD. This however changed once the DUSD loan incentive was introduced. To limit circular DUSD loans, and concurrently shore up demand for DFI, all DUSD loans that are backed by any amount of DUSD collateral will be required to maintain at least 50% of their collateral in the form of DFI. Here are some scenarios to ...