This proposal mainly discusses opportunities around:
USX liquidity support powered by PDLP (Protocol-Direct-Liquidity-Provision) across different blockchains and layers.
USX minting upgrade to reflect market-driven interest rates
The implementation of PDLP (approved through DIP-019) can effectively combat liquidity shortage for whitelisted protocols integrated with USX and EUX. Together with POO (Protocol-Owned-Operator), USX and EUX will be minted upon demand.
The approach is similar to DAI’s D3M module where DAI can be directly minted into lending protocol with yield token as collateral, further than that, USX can also be minted to provide liquidity for cross chain bridge, DEX, etc.
As we move to PDLP as the major way for providing USX/EUX liquidity, we propose to disable native minting of both stablecoins, so to standardize the approach.
PDLP tackles the ‘liquidity crash’ problem of USX and EUX effectively with guaranteed liquidity to whitelisted protocols, where market-driven interest rates are mainly determined by utilization rate of USX and EUX across various lending protocols.
As PDLP could be more efficient for providing USX/EUX liquidity, therefore, it is proposed to disable the native minting of USX and EUX on dForce Lending as well as Liqee Lending.
IMPORTANT: This approval, once accepted, will disable new minting of USX and EUX on dForce Lending and Liqee Lending; however, existing users who minted USX and EUX directly from dForce Lending and Liqee Lending do not need to do anything – they can either keep outstanding USX and EUX loans, or refinance the loans (in the event of more favorable rate via direct borrowing).
PDLP Limits and Venues
PDLP-powered USX will be mainly used as protocol-owned liquidity to power lending protocols (through direct deposit), non-lending protocols (i.e., cross-chain bridge), and other DeFi protocols across dForce network (both native dForce protocols as well as whitelisted ecosystem protocols).
Ethereum – 300m USX
300m USX will be extended to the broader Ethereum ecosystem – minting will take place on Ethereum, but can be bridged to L2 solutions including Arbitrum and Optimism within the limits:
Ethereum (150m USX)
Arbitrum (100m USX)
Optimism (50m USX)
BSC – 200m USX
200m USX will be minted natively on BSC via PDLP.
Approved PDLP limits are applicable to protocols listed below across all networks (including future deployment on other blockchains and layers):
Other venues would need to seek additional approval from dForce community.
PDLP limits: 300m USX on Ethereum (including Arbitrum and Optimism); 200m USX on BSC.