DeFiChain Advanced Tutorial - Revision history

Lemmy: /* Disadvantages */

2022-12-27T15:37:14Z

Disadvantages

SaschaGLM: Clarification in "Vault options" / Example

2022-09-22T04:44:49Z

Clarification in "Vault options" / Example

SaschaGLM: Frequently asked Liquidation-Question added

2022-09-21T19:17:02Z

Frequently asked Liquidation-Question added

SaschaGLM: Absatz oracles klarer formuliert

2022-09-21T18:43:07Z

Absatz oracles klarer formuliert

SaschaGLM: Komplett überarbeitet

2022-09-21T16:45:29Z

Komplett überarbeitet

SaschaGLM: Added vault maxi incl. link to github and added link to "investing&trading..."

2022-09-01T12:01:12Z

Added vault maxi incl. link to github and added link to "investing&trading..."

SaschaGLM: /* Collateral for Vaults / updated dETH as possible collateral and collateral requirements to 50% DFI or DUSD*

2022-09-01T12:00:03Z

Collateral for Vaults: updated dETH as possible collateral and collateral requirements to 50% DFI *or DUSD*

Misterpiggie49: Adding information about CFPs

2022-04-02T03:01:28Z

Adding information about CFPs

Misterpiggie49: Adding content

2022-03-30T19:24:16Z

Adding content

Misterpiggie49: Adding content

2022-03-25T22:33:22Z

Adding content

@@ Line 39: / Line 39: @@
 *Increasing supply of borrowed token (when you "borrow a token," you are actually minting new tokens, increasing the supply, which is good for DeFiChain)
 ====Disadvantages====
-*Risk of liquidation - can be significantly reduced by using Kügi's Bot [https://github.com/kuegi/defichain_maxi vault-maxi]
+*Risk of liquidation - can be significantly reduced by using Kügi's Bot  [[VaultMaxi|vault-maxi]]
 *Interest must be paid on borrowed tokens
 === Common Topics of Confusion ===

@@ Line 18: / Line 18: @@
 If the ratio goes below the chosen ratio, the vault is automatically sent to a liquidation process. Be aware that both the value of your collateral and the value of your loan is volatile. So movements on both sides influence the ratio - not only the collateral. Other users can bid to take the collateral from the vault (there is more information in the section below).
-Example: When going short on a token (take e.g. dTSLA as a loan) you expect dTSLA's price to decrease. If dTSLA values increases what you did not expect, your loan gets a higher value and so the ratio goes down even if the collateral has not changed.
+Example: When taking e.g. dTSLA as a loan and dTSLA's price increases your loan gets a higher value and so the ratio goes down even if the collateral has not changed.
 Users can take out DUSD stablecoins, or various dToken such as stock-, ETF- and commodities-tokens. This allows an investor to take several positions (long/short/neutral) and several cashflow-positions. Going short on a token means take a loan, sell it immediately and buy it back cheaper later. As the value of the borrowed token decreases, the less money is needed to pay back the loan. You also could leverage any crypto positions you have with the extra borrowed money. For further strategies see [[Investing & Trading with Decentralized Loans and Assets on DeFiChain]].

← Older revision		Revision as of 19:17, 21 September 2022
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	==== No Bids on Auctions? ====		==== No Bids on Auctions? ====
	Occasionally it would be unprofitable to bid on a vault, and in that case the vault keeps trying to get auctioned and liquidated.		Occasionally it would be unprofitable to bid on a vault, and in that case the vault keeps trying to get auctioned and liquidated.
		+
		+	==== Will I be liquidated when the collateral rules are not valid anymore in my vault? ====
		+	As stated above there are some collateral rules. Due to market-movements it is possible that you have a DUSD-loan which was initially correctly collaterized with 50% DFI is still above the liquidation ratio, but the DFI-value is below 50% of the collateral calue. Many users fear a liquidation at that time, but that will not happen. The consequence is just that you can not get more DUSD-loans until the collaterization level of 50% is reached again.

@@ Line 45: / Line 45: @@
 ==== Oracles and DEX Prices ====
-Tokenized assets on DeFiChain are always labeled d[Asset]. When they are exchanged on the DEX, investors might realize that the price on the DEX might not be the same as the actual price. So, there are actually two different prices of assets on DeFiChain. The first is the real price of the asset, which decentralized bots known as oracles use data from exchanges (Binance), crypto data sites (CoinMarketCap), and/or the Nasdaq (for stocks and ETFs). This price is called the oracle price, and whenever a user mints tokens in their vault, they receive the token at this price. On the other hand, we have DEX prices, which change due to DeFiChain investors and supply and demand. Sometimes there is not enough supply/too much demand, which means that the DEX price of the asset will be higher than what the actual price or the oracle price is. Or, there may be too much supply/too little demand, meaning that the DEX price will be lower. When you are liquidity mining or holding tokens of an asset, you are mining at this price or can exchange your tokens at this DEX price. DEX prices are prevented from going out of control compared to the real asset for two reasons. In crypto tokenized assets, Cake allows investors to exchange the crypto asset at a 1 to 1 ratio for the tokenized asset on DeFiChain, creating an arbitrage opportunity if the price goes too far out from the actual price of the crypto asset. As for stocks, the fact that users get to create new tokens at the actual price of the token also provides an arbitrage opportunity to keep the tokenized stock prices in line with real prices.
+Tokenized assets on DeFiChain are always labeled d[Asset]. When they are exchanged on the DEX, investors might realize that the price on the DEX might not be the same as the actual price. So, there are actually two different prices of assets on DeFiChain. The first is the real price of the asset, which decentralized bots known as oracles use data from exchanges (Binance), crypto data sites (CoinMarketCap), and/or the Nasdaq (for stocks and ETFs). This price is called the oracle price, and whenever a user mints tokens in their vault, they receive the token at this price. On the other hand, we have DEX prices, which change due to DeFiChain investors and supply and demand. Sometimes there is not enough supply/too much demand, which means that the DEX price of the asset will be higher than what the actual price or the oracle price is. Or, there may be too much supply/too little demand, meaning that the DEX price will be lower. When you are liquidity mining or holding tokens of an asset, you are mining at this price or can exchange your tokens at this DEX price. DEX prices are prevented from going out of control compared to the real asset for two reasons. In crypto tokenized assets, Cake allows investors to exchange the crypto asset at a 1 to 1 ratio for the tokenized asset on DeFiChain, creating an arbitrage opportunity if the price goes too far out from the actual price of the crypto asset. As for stocks we have so called "Future Swaps" which bring the dAssets once a week back into a +/- 5% range to the oracle price.
 ==== No Bids on Auctions? ====
 Occasionally it would be unprofitable to bid on a vault, and in that case the vault keeps trying to get auctioned and liquidated.

@@ Line 1: / Line 1: @@
-''Part of a series on [[DeFiChain Tutorials]]''
+===Vaults and Loans===
-In the previous [[DeFiChain Intermediate Tutorial|tutorial]], we went over staking and liquidity mining and how you can get cashflow by using these investment methods. In this tutorial, we will be going in depth about vaults and auctions, which are two new features in DeFiChain. We also want to go over DeFiChain Improvement Proposals (DFIPs) and Community Funding Proposals (CFPs), two things commonly heard about in DeFiChain which could enable '''you''' to help change the direction of DeFiChain.
+==== Collateral rules ====
-===Collateral for Vaults===
+* 50% of the vault must be collateralized with DFI when taking a DUSD-loan ("minting DUSD")
-A new feature that was recently introduced to DeFiChain is the ability to create a vault from which you can take out a loan and mint new tokens. A vault is similar to a bank, but it is decentralized and anyone can make their own. Users may deposit DFI, dBTC, dETH, DUSD, dUSDT, and dUSDC to their vault, and 50% of the vault must be collateralized with DFI or DUSD. Depending on which option borrowers chose for their vault, they can take out between $10.00 (for a vault that has a ratio of 1,000%, or $1 in loans for every $10 in collateral) to $66.66 (a vault with a ratio of 150%, or $6.66 in loans for every $10) in loans for every $100 of collateral. If the ratio of the vault falls below the ratio they chose, their vault is automatically sent to be liquidated, and people bid to take the collateral from the vault (there is more information in the section below).
+* 50% of the vault must be DFI or DUSD when minting any other dToken
 ====Advantages====
 *Hedging against stocks
@@ Line 14: / Line 41: @@
 *Risk of liquidation - can be significantly reduced by using Kügi's Bot [https://github.com/kuegi/defichain_maxi vault-maxi]
 *Interest must be paid on borrowed tokens
-===Bidding on Liquidated Vaults===
+=== Common Topics of Confusion ===
 Even as an advanced user, there can still be ideas that can be confusing. Here are a couple of topics that may be perplexing:
-=== Oracles and DEX Prices ===
+==== Oracles and DEX Prices ====
 Tokenized assets on DeFiChain are always labeled d[Asset]. When they are exchanged on the DEX, investors might realize that the price on the DEX might not be the same as the actual price. So, there are actually two different prices of assets on DeFiChain. The first is the real price of the asset, which decentralized bots known as oracles use data from exchanges (Binance), crypto data sites (CoinMarketCap), and/or the Nasdaq (for stocks and ETFs). This price is called the oracle price, and whenever a user mints tokens in their vault, they receive the token at this price. On the other hand, we have DEX prices, which change due to DeFiChain investors and supply and demand. Sometimes there is not enough supply/too much demand, which means that the DEX price of the asset will be higher than what the actual price or the oracle price is. Or, there may be too much supply/too little demand, meaning that the DEX price will be lower. When you are liquidity mining or holding tokens of an asset, you are mining at this price or can exchange your tokens at this DEX price. DEX prices are prevented from going out of control compared to the real asset for two reasons. In crypto tokenized assets, Cake allows investors to exchange the crypto asset at a 1 to 1 ratio for the tokenized asset on DeFiChain, creating an arbitrage opportunity if the price goes too far out from the actual price of the crypto asset. As for stocks, the fact that users get to create new tokens at the actual price of the token also provides an arbitrage opportunity to keep the tokenized stock prices in line with real prices.
-=== No Bids on Auctions? ===
+==== No Bids on Auctions? ====
 Occasionally it would be unprofitable to bid on a vault, and in that case the vault keeps trying to get auctioned and liquidated.

@@ Line 28: / Line 28: @@
 === CFPs ===
-CFPs are community proposals that community members create. Community proposals are used to get funding from DeFiChain's Community Fund, which is created by masternodes' block rewards. Community members can request funding for a DeFiChain project that are completing/would like to undertake.
+CFPs are community proposals that community members create. Community proposals are used to get funding from DeFiChain's Community Fund, which is created by masternodes' block rewards. Community members can request funding for a DeFiChain project that are completing/would like to undertake. Many community projects that are found in DeFiChain are partly funded by our community fund.
 == Common Topics of Confusion ==

@@ Line 20: / Line 20: @@
 == DFIPs and CFPs (verify) ==
-DFIPs and CFPs are two types of proposals in DeFiChain. When you become a masternode, one additional benefit is that you get to vote on these proposals. Every masternode gets one vote, and it requires a simple majority of "yes" masternode votes to pass the DFIP/CFP. (unfinished)
+DFIPs and CFPs are a large part of DeFiChain. Aside from normal development activity from the developers, there is also activity from the community, which should happen either way, as the point of decentralization is that the community eventually does all of the development, not a centralized team overseeing the development.
 == Common Topics of Confusion ==

DeFiChain Advanced Tutorial - Revision history

Lemmy: /* Disadvantages */

SaschaGLM: Clarification in "Vault options" / Example

SaschaGLM: Frequently asked Liquidation-Question added

SaschaGLM: Absatz oracles klarer formuliert

SaschaGLM: Komplett überarbeitet

SaschaGLM: Added vault maxi incl. link to github and added link to "investing&trading..."

SaschaGLM: /* Collateral for Vaults */ updated dETH as possible collateral and collateral requirements to 50% DFI *or DUSD*

Misterpiggie49: Adding information about CFPs

Misterpiggie49: Adding content

Misterpiggie49: Adding content

SaschaGLM: /* Collateral for Vaults / updated dETH as possible collateral and collateral requirements to 50% DFI or DUSD*