Category: General Information

The following is a documentation of a recent Twitter space hosted by Andreas Isaak (Twitter: https://twitter.com/andreasisaakme).

All I say is purely based on what I know from my knowledge, my experience and current public information that I understand. I do this Twitter space because I saw over at Twitter that a lot of people want to know more about DeFi Meta Chain. If you think I’ve misrepresented or missed anything, I’d be happy to discuss it in the comments below this Twitter space.

What I know from other EVM compatible blockchains

DeFiChain	DeFi Meta Chain
Turing incomplete (no universal programmability, very limited execution possibilities -> eliminating attack vectors)	Turing complete (universal programmability, you can basically do anything -> potential attack vectors)
Validators earn block rewards + transactions fees	Validators only earn transaction fees
Staking and smart contracts on consensus layer -> hard fork necessary for new features	Staking and smart contracts on app layer -> anyone can deploy smart contracts to DeFi Meta Chain and create dApps at any time. Smart contracts can act as a normal user and trigger other smart contracts -> automation
LP trading fee paid out	LP trading fee compounded
Rewards paid out immediately without staking	LP tokens need to be staked to earn additional rewards, are claimable manually
DeFiChain Wallet	Any wallet that supports custom EVM networks (MetaMask)
df1q address format	0x address format

What I know from U-Zyns presentation

• Those are just ideas from U-Zyns presentation and they are not final yet, everything is work-in-progess. Anything I say might not be applicable anymore. To be honest, I can’t really imagine myself how DeFi Meta Chain will look like in the end.
• DeFi Meta Chain is built on top of native DeFiChain, both chains will coexist
• DFI will exist in the current native-form and also in ERC20-like form on DeFi Meta Chain (ERC20 is a token standard)
• No new emission model
• DeFi Meta Chain will have the ability to latch onto any blockchain emergence without significant engineering effort.
• DeFi Meta Chain seeks to simplify the decentralized finance experience without compromising security, so that users can focus on the core activity.
• Users simply decide on the service and DeFi Meta Chain will guide you through the possibilities in the ecosystem -> marketplace of DeFi protocols.
• DFI will serve as the cross-chain currency.
• DeFi Meta Chain requires DFI staking for users to be able to suggest DeFi services to be added -> reputation token
• Containerization -> I didn’t understand that part, have to look into it again as soon as the concept of DeFi Meta Chain is more outlined.
• Ultimate goal is creating synergy instead of competition

Questions from the community

• Will DeFiChain have its own application (separate desktop and phone app or will it be built into the DeFiChain app)?
• What is the first network that is going to be supported?
• What exactly is DFI needed for when someone downloads a dApp from Ethereum or Binance Smart Chain from DeFi Meta Store?
• Is it technically so easy to connect everything together?
• I guess on DeFi Meta Chain there will be a lot more transactions than on DeFiChain because there will be way more stuff happening. How will DeFi Meta Chain be able to scale? Currently, many other blockchains struggle with scalability or just disregard decentralization to increase transactions.
• Aren’t we just creating another Ethereum or Solana?
• If dApps are created on DeFi Meta Chain by our community using Solidity: What would it take for the core team to implement this on the core layer? Does it have to be rewritten entirely?

We will answer all these questions in the upcoming articles. #DeFiMetaChain

Since the launch of dTokens in the last quarter of 2021, dTokens have become everyone’s darling with rewards north of 100% APR. These dTokens can be minted directly on the DeFiChain blockchain by utilizing the loan and vault features or by buying them directly on the DeFiChain DEX on the mobile app.

Due to the underlying architecture of these dTokens and the way investors used them so far, most dToken prices showed a consistent spread between oracle price and the price they have been trading for on the DEX.

With DeFiChain’s new DFIP, the leading #nativeDeFi blockchain will be introducing a future swap feature. This feature will introduce a new economic mechanics that introduce more utility to the revolutionary dToken. Economically, it is predicted that dToken price will trend closer to the oracle price despite it being not a peg nor cap.

Unlike traditional futures contracts where the price is predetermined, this feature on DeFiChain determines the settlement price (i.e. the oracle price) on the block height where the futures contract is to be executed (roughly every 7 days), hence the term Future Swap.

Future swap users will stand to gain if the dToken prices continue to deviate beyond 5% by the settlement block (i.e. extreme premium/discount). If the expected premium/discount is <5%, users will be better off swapping instantly.

With this feature, users will be able to:

• Buy dtoken with DUSD at oracle price of dToken + 5%
• Sell dToken and get DUSD at oracle price of dToken – 5%

Most importantly, regardless of the direction (dToken -> DUSD or DUSD -> dToken), the future swap should always result in a lower dToken price on the DEX.

How future swap is meant to close the premium/discount gap on the DEX

We distinguish between two cases:

In the event of dToken premium > 5%:

• Those holding on to dToken will want to swap it instantly to DUSD to gain more (rather than wait for the premium to go back to only 5% at the future settlement block) — this selling action will push the price down.
• Those holding on to DUSD will prefer to enter into a future swap instead as they only have to pay a 5% premium rather than the current price. This scenario only plays out if they assume that the premium is staying at ≥5% by the settlement block.

In the event of a dToken discount >5%:

• Those holding on to dToken will prefer to enter into a future swap instead so that their damage is capped to 5% (that said, they still lose out because they are getting 5% less than what they paid). This scenario only plays out if they assume that the discount is staying at ≥5% by the settlement block.
• Those holding onto DUSD will capitalize on the discount and swap immediately to the dToken (rather than wait for the discount to reduce to only 5%) — this buying pressure will drive the dToken price up, hence reducing the discount.

What is Staking?

“Proof of Stake” refers to a method or process that is used to establish consensus, validate transactions, and create new tokens. For this purpose, compared to the well-known proof-of-work blockchains (Bitcoin and Ethereum), the computing power of the validators is not used to perform transactions. Instead, validator nodes are created by depositing a set amount of coins or tokens depending on the blockchain. The owner of the node then becomes the validator and can check and confirm transactions that have been made.

As a positive incentive, validators receive a share of the incurred (transcation) fees as a reward for performing successful validations. However, for added security, validators are also penalized for incorrect behavior by a partial withdrawal of their cryptocurrencies. This misbehavior already includes, for example, an interrupted connection to the network. Therefore, as an individual, it is somewhat challenging to become a Validator on your own, as a stable and secure infrastructure is necessary. In addition, depending on the blockchain network, it is necessary to deposit a (relatively) high minimum amount and to guarantee long blocking periods. That is why staking is often done in delegated in large pools (Delegated PoS). Participants can already deposit smaller quantities in these pools so that the minimum amount and the required infrastructure can be guaranteed. Participants will then receive a pro-rated reward from the Rewards for the entire pool. On stakingrewards you get an overview of the biggest proof-of-stake blockchains with the average rewards and the percentage of coins that are already staked.

Staking at DeFiChain

DeFiChain also uses the proof-of-stake mechanism. To operate a masternode, a validator must first provision and lock 20,000 DFIs (priced at approximately $2.60 per DFI). Such a masternode is then responsible for validating transactions. In the future, however, it is planned to steadily lower the minimum number via community votes in order to be able to provide a higher decentralization and number of masternodes. To simplify the operation of masternodes, DefiChain offers a step-by-step guide for the desktop version.

A special feature of DeFiChain is a close connection to Bitcoin’s blockchain. Every 60 validated blocks (about 30 minutes), DeFiChain’s blockchain is entered into the Bitcoin blockchain using Merkle Root. The respective validator of this operation receives an additional reward for this. According to stakingrewards, a total of approximately 30% of all DFI is allocated to staking, which is currently worth $466 million. Furthermore, 91,000 users are involved in staking.

How can I stake my DFI at DeFiChain?

We have checked the market for you, for us currently three options make the most sense (without sorting). 1. set up your own master node. 2. use of the service of CakeDeFi. 3. staking via dfx.swiss. Due to the current price of DFI, it is sometimes difficult for private individuals to create such a masternode and participate in staking. Therefore, there is an option to have the staking done by others who receive a fee for setting up and running the masternode.

Staking services for amounts under 20,000 DFI

An alternative solution is to participate in the network via a pool of CakeDeFi. Here the possibility is offered to be able to participate also already with small amounts starting from 1 DFI in the Staking. In the so-called Freezer of CakeDeFi, DFI can be created for staking at different terms of 1,3,6,12,24,36,60 and 120 months. The higher the maturity, the higher the average return. For the investment over 1 month, the return is about 40% per year, and for a long-term deposit of 60 or 120 months, it increases to 63% and 92%, respectively. According to CakeDeFi’s own statistics, a total of approximately 48 million DFIs are currently deployed for staking, more than half of which are for the full 120-month term.

Another provider is dfx.swiss, which also offers a staking service. On a positive note, they offer these services not only for residential customers but also for business customers! Furthermore, they offer the possibility to invest directly with EUR, CHF or USD into the Staking, without the need to invest in a first step e.g. in a second step. DFI to buy. This can offer advantages, especially with regard to tax.

Staking services for contributions of 20,000 DFI or more

Another interesting option is offered by mydeficha.in. If you have 20,000 DFI (or more), mydefichain supports you to run a fullnode. Especially for people who are less intensively concerned with technical details, this has advantages! For example, one must not set up your own Linux server and worry about permanent availability (stability, internet connection, etc.). In addition, mydeficha.in offers support via the Telegram channel as well as via email.

Do you know of any other providers that we should include in our overview? Then feel free to send us a message or join the DeFiChain Telegram community. We look forward to seeing you!

Here you can find an overview of all Telegram channels of the DeFiChain community.

Main channels

• DeFiChain – English
• DeFiChain – German
• DeFiChain – Italian
• DeFiChain – Spanish
• DeFiChain – French

Masternode operator

• Masternodes International
• Masternodes Germany

Topic-specific channels

• DeFiChain Community Blog
• DeFiChain Accelerator
• DeFiChain-Income
• DFI.tax
• DeFiChain Portfolio
• JellyWallet
• saiive.live Wallet
• DFX.Swiss
• CryptoTax DACH

You know other Telegram channels? Then feel free to contact us with a short email or in our Telegram group.

What is Liquidity Mining?

In the following article, I provide an overview of liquidity mining in general and explain how exactly liquidity mining can be used on DeFiChain.

Liquidity mining is one of the core mechanisms for Decentralized Finance. Basically, the term liquidity mining describes the provision of liquidity for exchange (swap) on decentralized platforms. Each user can provide one cryptocurrency pair as liquidity depending on the pools offered. This will allow other users to exchange Bitcoin for Ethereum, for example, without the need for a central authority to implement the trade in trust and maintain an order book. Liquidity is provided without an intermediary party, but directly via smart contracts, through which all transactions in the respective pool are executed. There are fees for swapping cryptocurrencies on the part of a decentralized platform. These fees are then paid to liquidity providers on a pro-rata basis to incentivise the deposit of capital and cover transaction fees. Liquidity mining can therefore be used to generate passive income on its provided cryptocurrencies. As a further incentive, most of the platforms offer their own tokens that are additionally paid out to the deployers. These tokens can in turn serve as governance tokens for the platforms, to be used to negotiate and conduct democratic votes on changes to the platform. In addition, these tokens often have value themselves and can either be exchanged for other tokens or FIAT money, or used to perform other activities on the platform (including staking).

Liquidity Mining with DeFiChain

DeFiChain offers multiple trading pairs for exchanging cryptoassets on its own decentralized exchange and, accordingly, the associated liquidity pools. Currently (06.12.2021), 8 pools of cryptocurrencies are offered, each in exchange with its own cryptocurrency DeFiChain (DFI). These include Bitcoin, Ethereum, Litecoin, Bitcoin Cash, Dogecoin and three stablecoins (USDT, USDC and DUSD). Since 06.12.2021, numerous shares and ETFs are also offered, which can be invested together with the own stablecoin DUSD for liquidity mining. These include prominent stocks like Tesla, Gamestop, and Palantir, and ETFs like ARK or SPY (S&P 500). In return for providing liquidity, users receive an APR of partly EUR 1,000. over 200% depending on the trading pair. Basically, the greater the value of the entire pool, the lower the rewards, as these are divided between the users. In order to provide liquidity on DeFiChain, the DeFiChain app is first required, including the internal wallet. Once the app and wallet are set up, DFI can be sent to the wallet address and all DeFi features can be used. In order to provide liquidity, an equal share of value (meaning an equal value in USD, for example) of DFI and another cryptocurrency is required in each case, or dUSD and a dShare. So for example. 1 BTC (price $48,000 on 06/12/2021) and approximately 10,666 DFI (price $4.50 on 06/12/2021). The internal trading place can be used for this purpose.

Step-by-Step Guide

Setup and overview wallet

After successfully installing the mobile app and creating a wallet, all features can be accessed. In the two screenshots below, under the first tab “Credit”, you can see what a successful connection with an active wallet including credit looks like. Via “Receive”, the cryptocurrencies supported by DeFiChain can then be sent to one’s own wallet and subsequently used for liquidity mining.

Token exchange via DEX

To perform a swap on the trading venue in the next step, the sub-item Token Swap is selected in the app bar under the DEX tab. The desired amount of DFI or another offered cryptocurrency can then be exchanged there. When an amount is entered, the marketplace automatically calculates the equivalent value of the other currency. A certain fee is charged for such trading, which is then passed on to the liquidity providers. Above all, these fees are the reward and incentive for the providers.

Adding liquidity

In order to be able to provide liquidity, the sub-item Add liquidity is selected under the DEX tab. In this window all available pools can be viewed with the existing liquidity and APY. The desired trading pair is selected from these pools. After the appropriate pool has been selected, it can now be decided which quantities of the trade pair will be inserted. DeFiChain automatically calculates after entering one side (e.g. Bitcoin) how much has to be used on the other side (e.g. DFI). After the selection has been made, it is still possible to see how large one’s own share of the entire pool is before confirming the entire transaction with Supply. Among other things, this is relevant for the calculation of the so-called Impermanent Loss(link to Impermanent Loss Calculator). In principle, the cryptocurrencies inserted can also be withdrawn at any time in the previous menu via the own pools and used for other purposes.

Below is an overview of all available trading pairs with the current APR (09.12.2021)

Further information and links

The mobile app can be downloaded from the Apple App Store and Google Play Store using the links below. In addition, it is also possible to use a desktop app on a PC or laptop for Windows, Mac and Linux. As with all other blockchains, all transactions made, total value locked, masternodes and oracles used can be transparently monitored via defiscan.live.

Buy DFI – Where do you buy your DFI?

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:

• Exchanges for cryptocurrencies – Bittrex & KuCoin
  The most popular way to buy cryptocurrencies remains buying on a central cryptocurrency exchange. However, in order to use DFI, there must be at least one transaction to Cake or your own wallet.

• DeFi Platform – CakeDeFi
  The simplest way to get into DeFiChain is to buy DFI, Bitcoin, or Ethereum through a DeFi platform like CakeDeFi and then use the platform’s services for staking, liquidity mining, and lending.

• FIAT On-ramp – DFX.Swiss
  The most anonymous way to buy DFI is through the FIAT on-ramp from DFX.Swiss. After a one-time configuration you can easily buy DFI via SEPA transfer and get the DFI directly to your destination address – no matter if one-time transfer or standing order.

• DeFiChain Decentralized Exchange (DEX)
  Already own Bitcoin, Ethereum, Litecoin or USDC and want to exchange them for DFI? Then use CakeDeFi to convert your cryptocurrencies into tokens on the DeFiChain and then exchange them for DFI on DEX – in the process, you’ll also get to know the full potential of the DeFiChain right away!

Buy & Sell DFI – The ultimate overview (by DFX.Swiss)

Comparison of the individual providers

When are Vaults liquidated?

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:

• Minimum collateralization ratio: 150
  Interest rate: 5% annual interest
• Minimum collateralization ratio: 200
  Interest rate: 2% annual interest

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.

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Example:

– Loan amount: 1 dTSLA (incl. accumulated interest)
– Collateral: 500 DFI
– Loan model: 150% minimum collateral ration

Three scenarios:

1. Scenario – Initial situation
   dTSLA oracle price: 1.000 USD
   DFI oracle price: 4 USD
   Total value of loan: 1 dTSLA x 1,000 USD/dTSLA = 1,000 USD
   Total collateral value: 500 DFI x 4 USD/DFI = 2,000 USD
   Current collateral ratio: 2,000 USD / 1,000 USD = 200%
   
   Result: All is well – collateral ratio (200%) is above the minimum collateral ratio (150%)

2. Scenario – DFI price falls
   dTSLA oracle price: 1.000 USD
   DFI oracle price: 2.98 USD
   Total loan value 1 dTSLA x 1.000 USD/dTSLA = 1.000 USD
   Total collateral value: 500 DFI x 2.98 USD/DFI = 1.490 USD
   Current collateral ratio: 1.490 USD / 1.000 USD = 149%
   
   Result: Vault is liquidated – collateral ratio (149%) is below the minimum collateral ratio (150%)

3. Scenario – dTSLA price increases
   dTSLA oracle price: 1.700 USD
   DFI oracle price: 4 USD
   Total loan value: 1 dTSLA x 1.700 USD/dTSLA = 1.700 USD
   Total collateral value: 500 DFI x 4 USD/DFI = 2.000 USD
   Current collateral ratio: 2.000 USD / 1.700 USD = 118%
   
   Result: Vault is liquidated – Collateral ratio (118%) is below the minimum collateral ratio (150%)

What exactly happens during liquidation?

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:

1. If multiple dTokens have been taken as loans, a separate auction (also called “batches”) is created for each dToken with the proportional amount of collateral.
2. If a Vault has collateral in excess of $10,000, it will be split into multiple individual auctions (also called “batches”) so that no single auction has a value greater than $10,000.

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.

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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.

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Auction process:

1. A Vault no longer has sufficient collateral and is liquidated.
2. All collateral is split into one or more auction(s) – as described above.
3. For each auction a minimum price of (loan + interest) x (1 + 5% liquidation penalty) is set.
4. Now each auction is available for 720 blocks (about 6 hours).
5. Everyone can bid and must either meet the minimum bid or place a bid which is at least 1% higher than the last bid.
6. At the end of the auction, the amounts will be distributed as follows:
   1. All securities of the vault go to the highest bidder.
   2. The loan amount + the liquidation penalty (5%) will be exchanged for DFI and burned.
   3. The remaining amount, which exceeds the minimum bid, goes to the Vault owner (the amount remains in the Vault).
7. The liquidation of the Vault is finished and the Vault owner can use the Vault again for new loans or just cash out the remaining amount (here dTSLA).

If no one bids on the Vault within the auction, the auction will restart after 720 blocks.

What can you do as the owner of the Vault?

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.

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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).

How can I participate in an auction?

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:

1. DeFiChain Wallets – Download here
   1. On the command line in the desktop wallet or defi-cli (Windows & Mac OS)
   2. In the mobile wallet as a beta tester the function is also already available (iOS & Android)
      To do this, go to “Settings => About => Test beta features” and restart the app in necessary
2. Saiive.live Wallets – Download here
   1. In the saiive.live mobile wallet (iOS & Android)
   2. In the saiive.live desktop wallet (Windows & Mac OS)