A Closer Look at the July DFIP & CFP Voting Round

May 29, 2024

Three DeFiChain Improvement Proposal (DFIPs) and three Community Fund Proposals (CFPs) are up for vote in the latest governance voting round.

DFIPs:

  1. Free Market - Remove Discount and Stabilisation – abolition of DEX stabilization and discount fees.
  2. Step 2 of opening Defichain to outside investors – lifting non-market-compliant regulations and manipulations.
  3. Re-peg and re-collateralize the dToken system as deterministically and effectively as possible, without permanent expropriation – structured and deterministic approach to stabilize DUSD.

CFPs:

  1. CFP: Public Community Liquidation Bot & DFI Liquidity for SeahorseFi.xyz Lending & Borrowing Market – building a liquidation bot, converting 50% of liquidation earnings back to DFI
  2. Listing DeFiChain (DFI) on Coinstore (Continuation) – seeking an additional 7,000 USDT due to price volatility.
  3. Bringing back the Accelerator Program – revamping and simplifying the DeFiChain

The voting round for the proposals will end at Block Height 4,160,000 (roughly around 15th July 2024).

DFIPs:

1. Free Market - Remove Discount and Stabilization Fee

This DFIP proposes the abolition of the DEX stabilization and discount fees. Currently, an 80% fee is reduced by 10bps every 2880 blocks, aiming for a free market within eight days and disabling dUSD Bonds. The goal is to let DUSD and DFI prices be determined solely by supply and demand, eliminating any artificial constraints. 

This change aims to encourage more organic price discovery and help to increase trading activity and liquidity. By removing the fees, it is expected that DUSD holders will be more inclined to trade, which could reduce the backlog of sell orders and stabilize the market.

2. Opening DeFiChain to Outside Investors

This DFIP advocates lifting non-market-compliant regulations and manipulations, supporting new projects on the Defimetachain. Key steps include:

  • Removal of DEX stabilization fees and dynamic stabilization fees: This will allow market prices to be dictated by natural supply and demand.
  • Abolishing buy-and-burn bots: Eliminating these bots aims to reduce artificial manipulation and promote a more transparent market.
  • Ending negative interest rates: This step seeks to prevent market distortions caused by financial incentives.
  • Valuing DUSD in loans based on current market prices: This ensures loan values reflect true market conditions, enhancing financial stability.
  • Prohibiting DUSD as collateral for DUSD loans: This prevents the potential for circular lending practices that could destabilize the system.

These measures aim to attract external investors and projects, allowing for a more vibrant and financially robust ecosystem and potentially increasing the capital inflow and innovation within DeFiChain.

3. Re-peg and Re-collateralize the dToken System

This DFIP offers a structured and deterministic approach to stabilize DUSD, aiming to re-collateralize the dToken system through healthy loans backed by crypto. The proposal seeks to:

  • Achieve a stable peg: By ensuring dTokens are adequately collateralized, this measure aims to maintain the stability of DUSD.
  • Enable fair market price leverage trades: This is crucial for re-collateralizing the system and ensuring fair value trading.
  • Conditionally repay long-term supporters: Rewards for those who have supported the system over time help build trust and loyalty.
  • Provide real liquidity for projects: Ensuring that projects have access to real liquidity is essential for their success and sustainability.

The proposal aims to replace the existing system with a new one where ownership addresses are credited with minimal initial liquidity, gradually increasing based on predefined conditions. This method aims to create a more reliable and predictable peg without relying on market behavior, which can be unpredictable.

CFPs:

1. Public Community Liquidation Bot & DFI Liquidity for SeahorseFi.xyz

This CFP aims to build a liquidation bot, converting 50% of liquidation earnings back to DFI (accumulated in a separate wallet for traceability) until it reaches 600k DFI. The other 50% will supply liquidity for other markets. 

Funds will cover:

  • Infrastructure expenses: These include costs associated with running and maintaining the liquidation bot.
  • Liquidation of underwater positions: Ensuring that future positions can be liquidated efficiently.
  • Gas consumption: Covering transaction fees associated with liquidation processes.
  • Marketing activities: Promoting the bot and associated markets to attract more participants.

The proposal seeks to enhance liquidity and stability within the SeahorseFi.xyz lending and borrowing market, contributing to the broader DeFiChain ecosystem.

2. Listing DeFiChain (DFI) on Coinstore (Continuation)

Following a previous CFP, this CFP seeks an additional 7,000 USDT due to price volatility, alongside 5,000 USDT and 5,000 USDT worth of DFI for market-making liquidity. A 30% buffer is included to handle price fluctuations, with any excess added to market-making liquidity. 

This listing aims to:

  • Increase visibility and accessibility: Listing on Coinstore enhances DFI's market presence, making it more accessible to a broader audience.
  • Improve liquidity: Additional market-making liquidity ensures smoother trading and reduces price volatility.
  • Strengthen market confidence: A well-supported listing can boost investor confidence in DFI's long-term potential.

3. Bringing Back the Accelerator Program

Aimed at revamping and simplifying the DeFiChain and Metachain marketing efforts, this CFP seeks to:

  • Revive the Accelerator Program: Restarting this program aims to fund new marketing campaigns and re-engage the community.
  • Fund new marketing campaigns: Effective marketing is crucial for attracting new users and projects to the ecosystem.
  • Attract external participants: The goal is to bring in fresh talent and ideas, fostering innovation and growth.
  • Collaborate with the old Accelerator Team: Ensuring a smooth transition and leveraging existing social media handles and expertise.

The proposal aims to capitalize on the current bull market, shifting momentum and attracting more projects and users to the DeFiChain and Metachain ecosystems.

Final Words

The six proposals showcase the DeFiChain community's expanding vision — a unified drive toward meaningful adoption and ecosystem-level growth.

While the core developers put effort into enhancing protocol capabilities and decentralized finance features, contributions from the community are what will lead DeFiChain to the forefront of mainstream adoption.

Whether it is infrastructure reliability, developer growth, or exchange exposure - it ultimately comes down to a shared, inclusive outlook that values collective contributions regardless of background or credentials.

Further details and guidelines for submitting a Community Fund Proposal to support their own initiatives are available at github.com/DeFiCh/dfips#.

DeFiChain

Decentralized finance enabled on Bitcoin. A blockchain dedicated to fast, intelligent and transparent financial services, accessible by everyone.

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