CFPs & DFIPs – March 2022

The CFP and DFIP voting round in March is open

Masternodes, to the consoles! Once again DeFiChain goes into the voting round on CFPs and DFIPs. New projects, improvements to existing projects, correction of markups on dTokens, are on the agenda for the March round.

The decentralization of DeFiChain is measured by several criteria, including governance. In this regard, the process, well described in the Pink Paper, is that decisions about the development of the project are confirmed by the vote of the masternodes. Anyone can request project funding in a CFP or propose a modification to the blockchain in a DFIP. The presentation of CFPs/DFIPs is accessible through the official GitHub repository. The proposals are usually combined with a Reddit post to open a discussion between the author and the community. Confirmation of a CFP/DFIP is by an absolute majority of votes cast, similar to a certain election, the first round of which will take place in three weeks.

“hmm, maybe we should take inspiration from this system…”

One thing to keep in mind about DFIPs is that it is primarily a vote of confidence. Even if the majority votes yes, it does not mean that developers are committed to implementation.

For the March round, 11 CFPs and 2 DFIPs were released. Let’s start with the latter.

A DFIP to control them all

And for DeFiChain, to link them. I’m talking about dTokens, don’t panic.

The DFIP that Daniel Zirkel puts forward is the result of a discussion started on Reddit and at Twitter Space in early March, which you can listen to again here (we’re not holding up progress on this blog).

In it, it is proposed to introduce a mechanism whose goal is to lower the surcharge for dTokens. What is the surcharge specifically about? Today, there is a price difference between the DEX and the price oracles for dTokens. The oracles pay attention to external sources for price formation (NASDAQ, etc.) and set the price of dTokens when borrowing, while the buying and selling price is determined solely by supply and demand on the DEX. As a result, the DEX price has tended to be 10-40% higher than the Oracle price, a fact that some influential voices in DeFiChain, including Julian Hosp and Daniel Zirkel, view as a problem.

dtoken premium
View of dTokens’ price premium over the past two months (Source: DeFiChain Analytics).

Therefore, at the end of the discussions, it was concluded that a mechanism with weekly futures contracts on dTokens would be the best solution to force the price difference between DEX and oracles between 5% (premium) and -5% (discount). DZ describes the mechanism in the DFIP as follows:

  • Introduce futures contracts to match the prices of dTokens once a week (7*2880 blocks).
  • Establish 2 different futures contracts – one for the case of price premium and one for the case of discount.
  • The spread should be +/-5% so that when the market is closed (constant oracle price) the next price can be anticipated.
  • The markup future (premium future) should trade 5% above the oracle price (you can buy dTokens with a 5% commission).
  • The discount future would trade 5% below the oracle price ( one could sell dTokens at a discount of 5%).
  • Futures will be a weak link between DEX price and Oracle price: Higher or lower deviations are possible between settlement times.
  • Introduce an additional exchange fee of 0.1% for each dToken pool to burn dTokens. This fee should be charged in both directions of exchange.
  • Strengthen dUSD by counting them in the same way as the mandatory 50% DFI in the Vaults with a fixed price of $0.99.

So this mechanism is apparently not a fixed price regulator, but provides a window for traders to trade at +/- 5% of oracle prices, which could prove more functional if the dTokens become tradable across chains, for example.

Will Ethereum be enabled as a collateral?

The other DFIP in this round, proposed by Kevin Soell, suggests adding dETH to the list of tokens that may act as collateral in vaults. dETH could then stand alongside DFI, dBTC, dUSDC, dUSDT, and dUSD. The benefits put forward in the DFIP are as follows:

  • Extension of use cases
  • Use of rewards from the ETH/DFI LM pool.
  • Expansion of collateral diversification.
  • More potential rewards due to a larger Vault.
  • Preparation for potential “flipping” in the future.

Ability to earn rewards with dETH without the risk of impermanent loss.
Admittedly, ETH is so popular in the crypto world (it remains firmly in its #2 spot) that it seems only natural to give it this feature, adding value to generating profits on DeFiChain.

And the CFPs ?

Personally, I always get a bit excited when I discover the CFPs. You sometimes find very original things, and that can lead to extraordinary projects. For example, the company DFX was born from a CFP.

In this round, a CFP submitted by the company Azum proposes to encourage athletes by rewarding them for achieving their goals with DFI (Reddit thread here). Will it be confirmed? Other CFPs are looking at creating tools for developers: the Rest API to retrieve the history of DFI’s DEX awards, or a Python package to interact with the Ocean API.

Finally, there is a CFP to reward authors of articles on the blog with some DFI. In this context, I am starting a collaboration with this blog! Some articles from (not all) will be shared on and translated into several languages, which will increase readership. If the CFP goes through, I might get a coffee or two for my participation – and I would be very happy about that! If you’d like to support me too, for the coffees, for the accommodation costs, it’s this way.

By the way: Who can vote?

Owners of masternodes, with one vote per masternode,
owners of at least 20,000 DFI on CakeDefi,
DFX stakers, where their vote is counted in proportion to their share of the staking pool, and the majority of the pool then constitutes the vote share represented by DFX. I’m in that category (unfortunately not the other two… at the moment!).

When will the results be available?

Voting will close on March 28, 2022 at 23:59:59 UTC. The results will be officially published on March 30, 2022.

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