We ran a simulation over the timeframe of 3 months from 1st May 2024 to 07th Aug 2024 to test how the project performed in terms of various parameters.
We consider the below assumptions for analysis
- Every day only 1 new user participates in the borrowing module to mint & borrow $USDa
- Every user deposits only 1 ETH as collateral
- The Initial dCDS balance is assumed to be $20K
- 1 new dCDS comes everyday and deposits $500 worth of ($USDa + Volatile token) everyday
As can be seen, we have taken below optimal values for user participation and the amount being deposited by them. This will help us analyse the results for one of the worst case scenarios.
Below will be the 2 areas of user participation
Supply Side - Borrowing & Hedging module - Users deposit ETH or LRTs as collateral and mint $USDa at 100% synthetic value
Demand Side - dCDS Yield module - Users deposit $USDa and other tokens in dCDS module to earn high yields reaching upto 200% APYs
Summary of Results
- The collateralization ratio of collateral backing $USDa were always above 100% over past 3 month scenario. Thus, any $USDa minted during last 3 months can always be redeemed for > 100% ETH value and hence maintaining the $1 peg reliability.
- The total Downside fall protection for all users having borrowed $USDa at any instant reached a max of 42% of dCDS pool. It means that dCDS funds didn’t fall below 50% even during maximum volatility time periods and even considering minimal user participation with minimal value in borrowing & dCDS modules.
- Net dCDS yields/user reached a high of 64% within 3 months. This is after deducting any unrealized losses occuring due to above dCDS fall protection. Extending this to full year would yield 257.64% APY.
- When considering no repayment of loans by anyone, the total liquidations that can be handled by dCDS within 3 month reaches a maximum 119% so all liquidations cannot be fully handled by dCDS alone. However, we have 3 liquidation mechanisms available to ensure that the max liquidations handled by dCDS never crosses 50%.
Here are the results
Downside Fall Protection Per User
This measures the downside fall protection for every user with change in ETH price. As the ETH price decreases from a user deposited ETH price then that user is eligible for downside fall protection for upto 20% decrease in ETH price.
https://docs.google.com/spreadsheets/d/e/2PACX-1vSLUM5h2Z1vEG6BV-GYBnAm42BzmN_kRVbUjEhjvcroHqXysfW2kICvtoURymt5-WQ22IsEp7i5Wztm/pubchart?oid=813273341&format=interactive"></iframe>
Total Downside Protection enabled by dCDS at any instant
https://docs.google.com/spreadsheets/d/e/2PACX-1vSLUM5h2Z1vEG6BV-GYBnAm42BzmN_kRVbUjEhjvcroHqXysfW2kICvtoURymt5-WQ22IsEp7i5Wztm/pubchart?oid=195281108&format=interactive"></iframe>