DeFiChain Community BlogHere you can find an overview of all Telegram channels of the DeFiChain community.
You know other Telegram channels? Then feel free to contact us with a short email or in our Telegram group.
In the DeFiChain ecosystem, there are now very many ways to buy DFI and DeFiChain-based tokens. We are currently aware of the following platforms:
Platform | User Experience | Fair Pricing | Coins / Token | Fees - Buy | Fees - Sell | |
CakeDeFi | DeFiChain DEX | DFI, dBTC, dETH | 0 - 1,99% | nicht möglich | ||
DFX.Swiss | DeFiChain DEX | DFI, dBTC, dETH, dLTC, ... | 0,5 - 0,7% | 2,7 - 3,2% | ||
Bittrex | Partly illiquid | DFI | 0,75% + Transaction fees | 0,75% + Transaction fees | ||
KuCoin | Partly illiquid | DFI | 0,2% + Transaction fees | 0,2% + Transaction fees |
For each Vault on the DeFiChain, the owner of the Vaults has chosen a so-called Loan Scheme. This defines the necessary collateralization ratio, which has to be fulfilled at least, as well as the annual interest rate to be paid for the Vault. The following two loan schemes are available, for example, in addition to other models:
The minimum collateralization ratio means that a minimum amount of collateral in the form of cryptoassets must be available in the Vault during an active loan. The amount of collateral must be higher than the loan amount by at least the factor of the minimum collateralization ratio. If the collateral is worth less at any point in time (=> less than loan amount x min. collateralization ratio), the Vault will be liquidated.
Example:
– Loan amount: 1 dTSLA (incl. accumulated interest)
– Collateral: 500 DFI
– Loan model: 150% minimum collateral ration
Three scenarios:
If a vault is liquidated due to insufficient collateral, then the auction process of the vault’s collateral begins. One or more auctions are started for this purpose. The split of the auctions follows the following two rules:
A minimum bid is set for all auctions, based on the disbursed loan amount plus a liquidation penalty (5%). All bids must be made in the dToken in which the loan was disbursed.
Example:
– Loan amoun: 100 dTSLA (inkl. angesammelter Zinsen)
– Collateral: 1.500 DFI
– Minimum bid: 100 dTSLA + 5% liquidation penalty = 105 dTSLA
In our example, if a higher bid is placed than the minimum bid, all tokens above the minimum bid of 105 dTSLA will be issued to the owner/creator’s Vault at the end of the auction.
– Last bid: 125 dTSLA
– Payout to Vault owner: 125 dTSLA – 105 dTSLA (minimum bid) = 20 dTSLA
The remaining amount, which is not paid out to the Vault owner as residual value (i.e. the minimum bid – here 105 dTSLA), is exchanged back via DEX into DFI via DUSD and then burned.
Auction process:
If no one bids on the Vault within the auction, the auction will restart after 720 blocks.
As a Vault owner, you can limit your damage very much by acting cleverly. For example, the owner can bid at the auction of his Vault himself and make an excessive bid, which itself exceeds the value of the collateral. If the owner does this, he has only transaction costs except for the 5% liquidation penalty as well as possibly increased costs due to unbalanced DEX prices. Because by the auction of the vault the owner & highest bidder gets all collateral paid out and also the amount of his bid minus the loan amount (which he already owns anyway) and the 5% liquidation penalty.
Example:
– Loan amount: 1 dTSLA (incl. accumulated interests)
– Collateral: 300 DFI
– Minimum bid: 1 dTSLA + 5% liquidation penalty = 1,05 dTSLA
– Bid of the owner: 5 dTSLA
– Collateral paid out to the highest bidder (owner): 300 DFI
– Balance paid to the owner: 5 dTSLA – 1,05 dTSLA = 3,95 dTSLA
– Loan amount already in the owner’s possession: 1 dTSLA
Owner’s assets before liquidation:
– 300 DFI
– 5 dTSLA
Owner’s assets after liquidation:
– 300 DFI
– 1 dTSLA + 3,95 dTSLA = 4,95 dTSLA
Therefore, the loss to the Vault owner is only 0.05 dTSLA, which is the 5% liquidation penalty on the loan amount of 1 dTSLA.
Important:
In a real liquidation, there are transaction costs and possibly other costs (e.g. due to unbalanced DEX prices).
It should be possible to participate in auctions via all wallets in the future. However, this is not yet the case today (as of 09.12.2021) and therefore we briefly present here the previous options that allow participation:
Fort Canning Go-Live: 15. November 2021
It is confirmed – on November 15th the long awaited Fort Canning update will find its way to the DeFiChain mainnet. With this next big update after Eunos Paya in August, many new features will find their way into DeFiChain and especially into the wallets of the end users. While Eunos Paya introduced many background improvements and features such as 5y and 10y masternode freezers, Fort Canning now includes exciting DeFi features for end users of the DeFiChain ecosystem in particular.
The following features are implemented with Fort Canning:
Some of these features will be introduced with Fort Canning on November 15, but will be unlocked a bit later or will only be available on specific wallet types. The term dUSD can also be represented as dDUSD or DUSD and means the tokenized version of the US dollar currency. There are more details in the next sections.
As already described in the overview, decentralized loans involve the generation of new tokens for which other tokens have previously been deposited as collateral. Collateral is deposited by moving certain tokens (initially only DFI, dBTC, dETH and dUSD) into a virtual vault. For each vault, a total value of all deposited collateral can be calculated in US dollars using the price oracles (the current prices can also be viewed here: https://defiscan.live/prices).
As soon as the collateral has been deposited in the Vault, the owner of the Vault can have a flexible credit amount paid out. The credit amount can be paid out in any token (DFI, dUSD, dBTC or even share tokens). The maximum credit amount is only a fraction of the stored collateral and depends on the selected credit interest rate. The selected annual interest rate is calculated pro rata for the duration of the loan and is due at the end of the loan together with the repayment of the loan amount. The loan interest rate, the loan amount and the deposited collateral can be flexibly adjusted at any time.
To close a loan, there are two options:
By creating loans, you can also take short positions (betting on a price drop instead of a price increase) and leveraged trades, among other things. You can find more information about this here in the linked videos.
Procedure of a loan:
Also as already introduced in the overview, decentralized share tokens (dShares) will find their way onto the DeFiChain with Fort Canning Update. The dShares are not backed by real shares, but are generated and traded natively via the blockchain. The generation of new shares takes place by means of loans based on price oracles as explained above. This means that no real shares are deposited for share tokens traded on the DeFiChain. The collateralization of the dShares takes place exclusively via other tokens/cryptocurrencies on the DeFiChain. This has the enormous advantage that dShares are only considered as tokens and do not have to be considered as shares.
This bypasses some regulations, is treated differently for tax purposes and could become a central part of the DeFi ecosystem of the future. In Germany, for example, it would currently (in 2021) be possible to hold a dShare beyond one year, which would make it possible to sell the dShares tax-free after the holding period. On the other hand, of course, the investor has no voting rights as well as no access to a dividend, since he does not own a real share. In addition, dShares are always associated with the risk that the price of the dShares, e.g. on DeFiChain, does not reflect the price of real shares on stock exchanges.
dShares can be obtained in two ways:
The creation as well as the purchase of dAktien is possible thereby also in smallest fractions.
In order to be able to use the DEX liquidity pools, many users must of course provide their liquidity (in the form of dShares and dUSD). For this – as also for existing pools e.g. DFI-BTC – high rewards (so-called block rewards) are given to the providers of liquidity. Especially in the first weeks and months, very high returns are expected for liquidity providers.
Currently, not all wallet types support all features introduced with Fort Canning. You can find an overview of the function availability in the following table:
Wallet | Kredite - | Kredite - | Aktien Token - | Aktien Token - | |
Desktop Wallet | |||||
Kommandozeile (DeFiCain CLI) | |||||
Mobile Wallet (iOS, Android) | (End of Dec 21) | ||||
Saiive.live Mobile Wallet |
In addition to the information described here, there are of course many other details about the Fort Canning Update that cannot be summarized on one web page. Therefore, you will find an overview of further information sources here:
The most well-known blockchain project – Bitcoin – has been using the so-called proof-of-work consensus mechanism since the beginning of the blockchain in 2009. This mechanism makes the Bitcoin blockchain particularly secure due to its widespread use. However, this mechanism also has a decisive disadvantage: the consensus is achieved by performing work (proof-of-work) and leads to very high energy consumption due to the large number of operators of the blockchain (miners). Many other blockchains therefore opt for a different consensus mechanism – the so-called proof-of-stake. This proves the correctness of the blockchain not by applying computing power/energy, but by using or holding the native currency of the blockchain (this is “DFI” for the DeFiChain). This bypasses most of the energy consumption of a blockchain network. There are other consensus mechanisms that are not explained here.
In proof-of-work based blockchains, the blockchain is continuously updated by the “mining” further developed – e.g. with Bitcoin, a new block is added to the blockchain approximately every 10 minutes. The “miner” receives a reward for each new block if the block is accepted by the network. To do this, the “Miner” has to solve an arithmetic puzzle, which is solved faster the more computing power the “Miner” uses for it.
In proof-of-stake based blockchains, the blockchain is instead governed by the “staking” further developed – e.g. With DeFiChain, a new block is added to the blockchain about every 30 seconds. Again, the staker receives a reward for each new block if the block is accepted by the network. For this, the “staker” does not have to solve an arithmetic puzzle, but it is decided at random which “staker” is allowed to create the next block. However, the probability of a “staker” being selected at random depends on the number of its native currency units used or, in some blockchains, on the number of masternodes operated (servers that operate the staking), which in turn are associated with a Minimum number of native currency units (e.g. currently 20,000 DFI with DeFiChain) must be equipped.
| Shape | Description |
|---|---|
| Standard Proof of Stake | Anyone holding native currency units of the blockchain can participate in the proof-of-stake process. The probability that someone gets to create the next block is weighted according to the proportion of all currency units staked. |
| “Minimum Stake” Proof-of-Stake | Only persons with a minimum number of currency units can participate in the Proof-of-Stake process. Each staking participant has the same chance to create the next block. The DeFiChain uses this form and requires a minimum number of 20,000 DFI. |
| Delegated Proof of Stake | Anyone holding native currency units of the blockchain can participate in the proof-of-stake process. However, not everyone may/needs to operate a node that participates in the proof-of-stake process. Instead, you can delegate your own currency units to an existing node and still get the prorated rewards. A minimum number of native currency units is often required here as well. The probability with which a node is allowed to generate the next block is weighted according to the share of all currency units staked. |
The DeFiChain uses the Proof-of-Stake method in the “minimum stake” form. At least 20,000 DFI (or 20,011 DFI including fees) are required to participate in staking and receive the rewards. In addition, a master node must be operated, which is continuously online and participates in the proof-of-stake process.
Each node – regardless of whether it holds 20,000 DFI or 100,000 DFI – has the same probability of being allowed to create the next block. Therefore, with a larger fortune (> 20,000 DFI) multiple masternodes are operated to receive all potential rewards.
The DeFiChain ecosystem currently offers to participate in staking yourself three alternatives :
