DIP-7 Treasury Bonds
fixed-rate DEUS Treasury debt tokens with a maturity range between 8 weeks and 52 Weeks.
With UST collapsing, the stablecoin market was shaken; We believe a confident peg at $1 and fully collateralized backing is the only answer to resolve short-term peg stability.
The goal is to get DEI to a 1:1 backing with a basket of assets.
We will achieve this by selling DEUS Treasury bonds in exchange for collateral.
Planned are Bonds for stablecoins: USDC, DAI, FRAX.
Later, also volatile assets: BTC, FTM, ETH.
How does FRAX recollateralize its treasury?
They are using a “recollateralize” model.
We believe this creates too much short-term price suppression on your governance token. That’s, ‘s why we came up with something we believe is more elegant and long-term, inspired by the best stable coinproject in human history, the US dollar.
What are US treasury bonds?
Treasury bonds (T-bonds) are government debt securities issued by the U.S. Federal government with maturities greater than 20 years. T-bonds earn periodic interest until maturity, at which point the owner is also paid a par amount equal to the principal.
How will DEUS equivalent work?
Like US Treasury Bonds, DEUS bonds pay the principal back in a stablecoin after maturity.
The DEUS Protocol acquired DEI through the AMOv3. Those DEI are currently around ~35M subtracted from the total supply of ~90M; there is around 65M free-floating backed by ~35M DEI ready to be sold via Bonds and 25M USDC/USDT/ETH.
The reason we are short USDC on the treasury and up DEI is because of AMO buybacks during the hack.
The DEUS treasury bond program will temporarily remove that 35M DEI from the market while adding collateral to the DEI Treasury.
This will continue in balance and automated, creating an unbreakable backing at 1 DEI: 1 USDC while also dampening the DEUS selling pressure into the future.
Different than OHM Bonds or other Bonds you know from crypto, DEUS Treasury bonds mimic the behavior of US Treasury bonds.
After the maturity of your DEUS Treasury Bond, you will be able to redeem 1 DEI for 1$ worth of collateral you deposited while collecting a fixed interest until maturity. You are not selling your collateral against a volatile asset. You are swapping stable to a stable with a timelock.
Doesn’t that mean that this creates sell pressure on DEI in the future?
Yes, at some point DEI of Treasury Bondholders will mature, and they will be able to sell it, but because of the dynamic behavior and different maturity dates, selling pressure is dampened. On top of that, we will also offer attractive programs to maturing bonds that will either make them keep their DEI locked, or redeem it directly for underlying USDC.
If too much DEI gets sold, the protocol repurchases them and offers them as Treasury Bonds. This creates a “safety net” through which the DEUS Treasury can increase its balance sheet long term while dampening selling pressure short term.
Reverse dutch auction with increasing fixed interest.
DEUS Treasury bonds for sale will increase attractivity over time if they are not bought by increasing the fixed interest that a buyer can expect every block where the bonds have not been purchased.
How does it work in detail?
Quick example, let’s imagine the protocol has 5M DEUS Treasury Bonds to sell. We offer them via our Bond Marketplace.
A user can come to the marketplace, select a maturing date, and based on that; the protocol calculates an individual fixed interest for his time of holding the bond; after maturity, he can withdraw the underlying principle as DEI.
Bonds will be transferable; we are still deciding if we want to have them as NFTs (so maturity time can be more flexible)
Important TL:DR on Bonds
- Fixed interest over a user-selected period based on current market conditions
- possibility to burn a bond before maturity with a punishment tax.
- possibility to sell your bond as an NFT on the secondary market.
- redeem your 1 USDC paid for the Bond as 1 DEI after maturity, and collect the fixed interest until then.
- Bonds are low-risk fixed-interest products, Bonds can be at any time burnt and redeemed for USDC, in a Black swan you are protected from your bond going to 0.
Will this affect redeeming?
Yes, we will implement a dynamic redeeming mechanism, meaning if the treasury is at 100%, you can redeem for 100% USDC; if it’s at 80%, you can redeem at 80% & 20% DEUS. (the protocol-owned DEI bought back from the market and DEI in maturing bonds will not be counted to the circulating supply.)