#DefiBack Powered by PolyDogeDAO
Yes fam, just as the title says, Defi is back! Brought to you by the one and only Polydoge. Passive income for Polydoge hodlers, wheeeee…
Yes fam, just as the title says, Defi is back! Brought to you by the one and only Polydoge. Passive income for Polydoge hodlers, wheeeee isn’t that beautiful. In this article, we’ll discuss everything about it and how it works.
PolyDogeDAO
PolyDogeDAO is a fork of Tomb finance (a protocol built on Fantom) and an innovative solution that can adjust Polydoge supply deterministically to move the price of stable coin PDD (PolyDogeDollar) in the direction of its target price. Technically, PolyDogeDAO is designed to use an algorithmic central protocol (a mechanism to keep a token by using price stabilization algorithms to keep the value of an asset, usually at $1) to manage the supply of PDD tokens.
PDD, PDS and PDB — the 3 components of PolyDogeDAO
PDD
PolyDogeDollar uses the stability system in the PolyDogeDAO to maintain its peg to 1 Matic.
1 PDD = 1 Matic
The ideal balance of PDD, all things being equal.
PDS
PolyDogeShare is the key token in PolyDogeDAO — it represents the trust that PDD will be pegged to Matic.
‘How?’
When the Time Weighted Average Price(TWAP — the average price of a token over a specified time) of PDD is above the Matic peg, the protocol mints PDD to PDS hodlers who stake their PDS in the boardroom.
PDB
PolyDogeBond helps to drive changes in PDD’s supply; when the TWAP of PDD is below the peg of Matic, PDB gets issued and PDD is used to swap to it. The swapped PDD gets burnt, thereby reducing its supply.
Mechanism When PDD is Below and Above Peg
When PDD is below matic peg;
‘What’s matic peg?’
Matic peg is the target price of matic to a token. PDD, for example, has to be at the price of 1matic for it to be at matic peg.
1 PDD < 1.01 Wmatic (contraction) (wrapped matic — a token that has the same value as matic, mainly used in DeFi)
PDS stops minting PDD so it becomes useless at that period. Well, the good news is PDB gets issued, so PDD is simply swapped to PDB. The sold PDD gets burnt, thereby reducing the supply of PDD. In economics, less supply means more value.
When PDD is above Matic peg; 1 PDD > 1.01 (expansion) Wmatic, the supply of PDD is increased via boardroom stakers as PDS earns you more PDD (this makes PDS very valuable). This increased supply of PDD with the algorithmic mechanism will make PDD’s increased price reduced to stay at the peg. Also, in this scenario, PDB hodlers can swap their PDB to PDD, which earns hodlers profit — people who swapped their PDD to PDB when PDD was below peg will make profit as they swap back their PDB to PDD when above peg. For eg, PDD price is 0.7$, swap PDD to PDB. Then, it recovers to above peg at 1.01, swap to PDD. Profits!
Genesis Pool
This is an incentive to reward early stakers PDD. But, this lasts for a short period — 4 days. It launched on March 29, 2022, and ends on April 2, 2022. An initial mint of 80,001 PDD will be issued to USDC, Matic and Polydoge stakers. 9,000 PDD will be reserved for USDC stakers; 9,000 PDD for matic stakers; 8,000 PDD for PolyDoge stakers and 14,000 PDD for PDD-Wmatic LP pool. Note, there’s a 2% deposit fee for USDC and Wmatic stakers.
Farms
This is where PDS is minted. It launched on March 30, 2022, and will last for 12 months. PDS has a total supply of 100,001 tokens. It is distributed as follows: 90k PDS is allocated to liquidity providers, 5k PDS to PolyDogeDAO, 5k PDS to the team, and the remaining 1 PDS will be used to create two pools for PDS, which are: PDS-WMATIC pool and PDS-ETH pool.
Liquidity Providers will be rewarded with PDS as follows: 50k PDD for PDS-WMATIC, 15k for PDS-WMATIC, 15k for PDS-ETH, and 10k for PolyDoge.
Boardroom
This is where the real action goes on, it’s the main part of the PolyDogeDAO as it helps to maintain stability in the protocol. The main token in control here is PDS; it earns you PDD as you stake your PDS in the boardroom. This happens at each epoch ( or you might call it round — this lasts for 6hrs and in a day there are 4 epochs. PDD rewards are distributed to PDS stakers when each epoch ends. So, to get a reward, you’ll need to stake your PDS before the current epoch ends.)
There are 3 phases of rewards in the boardroom:
During normal conditions the protocol keeps 60% of the expanded PDD supply for PDS stakers, 30% for PolyDogeDAO fund and 10% for dev team. This kept PDD supply will be distributed to PDS stakers during each epoch expansion.
2. During the Debt phase in expansion periods ie, the period where PDB will be swapped back to PDD — this happens after contraction; 65% of PDD is kept in the treasury for PDS hodlers so they can participate in bond (PDB) swapping/redemption period. Once the treasury is full to meet the bond redemption period, expansion rates go back to normal.
3. During contraction periods, PDS hodlers won’t be able to mint PDD therefore deposits and withdrawals of PDS or claimed PDD rewards are locked for 6 and 3 epochs respectively.
DAO Fund
This is the defense line of the protocol, the fund is kept to conduct buybacks and help maintain the peg. Very soon it’ll move to a governance system where DAO members vote on how funds will be used.
Roadmap
A blind man will see this roadmap and turn bullish in a switch of a second. Both of us can guess what happens in the situation of a seeing man.
Don’t underestimate the powers of PolyDogeDAO the new king of Polygon Defi.
If you enjoyed this write-up and would like to reach out to me. This is my twitter handle — twitter.com/0xSalazar
Please remember to do your research. None of this is financial advice.