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Pegbreaker
  • Whitepaper
  • platform and features
    • Platform Features
    • Minting Strategy
    • LP Staking Program
    • Yield Strategy – Sustainable On-Chain Yield Generation
    • Lending platform
    • Epoch Staking and Reward System
    • Bond Issuance and Management
    • Governance, Proposals and Delegation
    • Points System
    • Maximizing Profits Through Risk-Free Approach
    • Leveraging AI Tools to Simplify the Experience for Users
    • AI-Driven MEV Bot Strategy
    • Exploring DeFi Vulnerabilities
    • Roadmap and Future Developments
    • Security and Compliance
    • Frequently Asked Questions
  • DAPP
    • WIP....
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On this page
  • Introduction
  • Controlled DPG Minting Mechanism
  • Eligibility for Minting
  • DAI Handling
  • User Staking and Locking
  • Key Benefits of the Strategy
  • Risk Mitigation and Enforcement
  • Example Scenario
  • Conclusion
  1. platform and features

Minting Strategy

Pegbreaker Minting Strategy: Leveraging MakerDAO for Stability

Introduction

This document outlines the PegBreaker minting strategy, focusing on controlled DPG issuance, liquidity management, and price stability. The strategy leverages MakerDAO borrowing to create a robust mechanism for maintaining the $1 peg and pressuring DAI's stability.

Controlled DPG Minting Mechanism

Eligibility for Minting

  • Users can mint DPG 1:1 against DAI only if DAI's price is above $1 relative to USDC.

  • Minting is restricted to users who utilize the MakerDAO strategy, borrowing DAI at the maximum rate of 150% collateralization.

DAI Handling

  • The borrowed DAI is deposited into the PegBreaker treasury.

    - Deposits auto-converted to USDC using the best pools on-chain (e.g., Uniswap).

    - 90% of the USDC is added to liquidity pools.

    - 10% of the USDC is allocated to the treasury to support price stabilization during downturns.

User Staking and Locking

  • The user's DPG is auto-staked and locked until the next epoch (e.g., weekly or monthly).

  • Users cannot request to unstake and receive DAI back, as this would counter the protocol?s

    strategy.

  • The only option for users is to sell DPG in the liquidity pools.

Key Benefits of the Strategy

  • Price Stability: By requiring minting through MakerDAO, the protocol ensures that only highly

    collateralized DAI enters the system, reducing risks.

  • Liquidity Support: Auto-conversion of DAI to USDC and allocation to liquidity pools strengthens

    market depth and reduces slippage for trades.

  • Treasury Resilience: A portion of funds (10%) is reserved to support the DPG price during

    downturns, ensuring peg stability.

  • Aligned Incentives: Users are incentivized to follow the protocols goals while reducing

    circulating supply through staking and limiting immediate sell pressure.

Risk Mitigation and Enforcement

  • No Redemption of DAI: Users cannot redeem their DPG for DAI once minted, as this would contradict the protocols objective of pressuring DAI and maintaining DPG stability.

  • Market-Driven Selling: Users must sell DPG through the protocols liquidity pools, ensuring sell pressure contributes to market dynamics.

  • Controlled Minting Conditions: Minting is only allowed when DAI is above $1, ensuring that the protocol does not exacerbate price instability.

  • Auto-Staking Mechanism: Auto-staking and locking mechanisms prevent sudden liquidity withdrawals, fostering long-term stability.

Example Scenario

  • User Mints DPG: User borrows $10,000 DAI from MakerDAO at 150% collateralization and deposits it into PegBreaker.

  • DAI Conversion:

    - The $10,000 DAI is auto-converted to USDC:

    - $9,000 USDC is added to liquidity pools.

    - $1,000 USDC is allocated to the treasury.

  • User Staking:

    - The user receives 10,000 DPG, which is auto-staked and locked until the next epoch.

    - The user cannot unstake and redeem DAI but can sell DPG through liquidity pools if desired.

Conclusion

The PegBreaker minting strategy ensures sustainable DPG issuance, supports liquidity, and maintains price stability while aligning user incentives with the protocol?s goals. By leveraging MakerDAO, the strategy creates a robust mechanism to maintain the $1 peg and achieve long-term ecosystem resilience.

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Last updated 4 months ago