How to Earn 45-55% APY with Interest Bearing DefiDollar by Defi Dad

2020 has seen an explosion of stablecoins on Ethereum, with nearly $20B in liquidity. The most significant narrative around stablecoin growth on Ethereum has been yield-returning stablecoins like yUSD, algorithmic stablecoins like ESD, and risk-insured stablecoins like mUSD.

DefiDollar aspires to be “a risk-insured stablecoin layer for DeFi” by providing a new stablecoin DUSD, that holds the dollar peg while returning yield. The basket approach diversifies the risk and allows more types of collateral to be onboarded and allows integration with yield generating DeFi primitives. DefiDollar claims the built-in protocol mechanisms along with arbitrage helps keep the peg close to $1.

DUSD is conveniently minted with yUSD, yCRV, DAI, USDT, USDC and TUSD, which are all very liquid, battle-tested stablecoins and yield-returning stablecoins.

The Interest Bearing DefiDollar (ibDUSD) — A simple savings account

DefiDollar has a simple to understand yield-earning mechanism to enable ibDUSD as a powerful savings account built on top of the DefiDollar protocol.

After minting or buying DUSD, one can deposit DUSD in exchange for ibDUSD. ibDUSD aims to be an interest bearing token that gets stronger as protocol accrues income.

The protocol rewards accumulate on the DUSD LP thanks to the following earnings::

  • Trading fees generated on the Curve pools (referring to yCRV)
  • The yield from the yUSD Peak
  • DUSD redemption fee — 0.1%
  • The ibDUSD redemption fee — 0.5%

While your ibDUSD earns a share of the DUSD and ibDUSD redemption fees, it’s worth highlighting one will likely eventually pay those same exit/redemption fees. Keep in mind, the 0.5% redemption fee is used to guard against malicious actors trying to frontrun the rewards

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