DEIv2 & how to clear old debt.

Abstract

Deploy a new DEI that is 95% backed by USDC, use the outstanding 20m USDC from the old DEI, and offer every user a flat migration level.

Reason

It’s clear that only with a fully intact and backed DEI, DEUS can generate revenue needed to clear up past debt. Free circulating DEI is jeopardising current and future profits until health is installed.

By forking and deploying a new DEI we can inherit those measures and generate profits immediately. Every newly minted DEI can already generate profits needed to repay debts & enhance health until v3 is fully launched.

We are targeting a 95% USDC backing for the new DEI after redeployment.

But for minting, we will require 100% USDC until the debt is repaid.

We will incentivize Pools on multiple DEXs to get the required demand and clear the bad debt.

Summary of bad debt

Currently, there are around 25 million DEI remaining in Wallets, with a 50/50 redeem-to-bond ratio. Currently, this would mean the following Debt is remaining:

~5,7m to Scream lenders.

~3m to DEI bonders. (IL-affected & nonNFT bDEI holders)

updated on 14.01.2022

What is “seigniorage”, & where are the 4 cents coming from?

When someone mints the newly deployed DEI for yield farming or using the v3 Synthetics platform, they will need to deposit 1 USDC for 1 new DEI

95c of that USDC will be deposited as collateral for a new DEI
4c “seigniorage” will be deposited into a contract that clears the bad debt.
1c would be used to buy back DEUS and burn it.

250–600m open interest to cover the total bad debt with a new surplus in USDC.

V3 profits and other protocol revenue will be on top.

This leaves current DEI holders with two options:

Hold DEIv1 until there is protocol-surplus in USDC backing to swap it into bDEI and then redeem it for DEIv2.

Swap DEIv1 into vDEUS and wait until DEUS reaches 250$