DUCA

Minting, burning & swapping of DUCA

DUCA Minting

Whenever there is demand for DUCA and the Stability Pool does not have sufficient DUCA available the Protocol will create new DUCA. DUCA is created with DCM (DuCa Mint) valued at the DCM Exchange Value and DUCA valued against the DUCA Exchange Value. Via the DMM the DCM Market Value will be determined. The Stability Pool receives DCM when creating DUCA and adds these DCM for 100% in the Reserve.

DUCA CREATED

DUCA=(DCM Exchange Value)×(DCM tokens)\mathrm{DUCA} = (\mathrm{DCM\ Exchange\ Value}) \times (\mathrm{DCM\ tokens})

DUCA Burn

When DUCA Supply exceeds market demand a DUCA Burn event will be executed. Whenever there is DUCA present in the Stability Pool, the DUCA Supply in the Stability Pool will be decreased. DCM will be used from the Reserve to swap a pre-determined amount of DUCA from the Stability Pool for DCM valued at Par Value.

All DUCA received will be burnt, this process is fully automated and predetermined. The aim is to keep the DUCA Supply aligned with market demand.

  • Every 24 hours 10% of the DUCA Supply present in the Stability Pool will be burnt with a minimum of 10.000 DUCA per event. If there are fewer DUCA present in the pool all DUCA will be burnt.

  • When the number of DUCA in the Stability Pool exceeds 10% of the total Liquidity in the Stability Pool a DUCA Contraction event of 10% of the DUCA present in the Liquidity will be executed with a minimum of 10.000 DUCA per contraction.

Liquidity Swaps

The AMO can perform liquidity swaps with the Stability Pool. A DUCA Swap will send in DUCA that is valued at the Exchange Value and return DCM valued at its Market Value. A DCM Swap sends in DCM valued at its Exchange Value which returns DUCA valued at its Exchange Value. These swaps form the basis of the stability mechanism of DUCA within the Protocol.

DCM EXCHANGE VALUE

DCM Market Value>DCM Par Value;DCM Exchange Value=DCM Market Value\mathrm{DCM\ Market\ Value} > \mathrm{DCM\ Par\ Value} ; \quad \mathrm{DCM\ Exchange\ Value} = \mathrm{DCM\ Market\ Value}

DCM Market Value<DCM Par Value;DCM Exchange Value=DCM Par Value\mathrm{DCM\ Market\ Value} < \mathrm{DCM\ Par\ Value} ; \quad \mathrm{DCM\ Exchange\ Value} = \mathrm{DCM\ Par\ Value}

DCM / DUCA SWAP

DUCA=DCMIn×DCM Exchange Value\mathrm{DUCA} = \mathrm{DCM_{In}} \times \mathrm{DCM\ Exchange\ Value}

DUCA / DCM SWAP

DCM=DUCAInDCM Market Value\large \mathrm{DCM} = \frac{\mathrm{DUCA_{In}}}{\mathrm{DCM\ Market\ Value}}

Seigniorage

When DUCA or DCM are trading below their minimum values a Seigniorage (tax) will be applied to the swaps to avoid value extraction from the Protocol that destabilises the Protocol. A negative outcome of the calculation means the Seigniorage is 0. The Seigniorage will be paid in DCM and added to the DUCA Treasury.

DCM / DUCA SWAP

Seigniorage=DCM Par ValueDCM Market Value\mathrm{Seigniorage} = \mathrm{DCM\ Par\ Value} - \mathrm{DCM\ Market\ Value}

DUCA=DCMIn×(DCM Par ValueSeigniorage)\mathrm{DUCA} = \mathrm{DCM_{In}} \times (\mathrm{DCM\ Par\ Value} - \mathrm{Seigniorage})

DUCA / DCM SWAP

Seigniorage=1DUCA Market Value\mathrm{Seigniorage} = 1 - \mathrm{DUCA\ Market\ Value}

DCM=(DUCAIn(DUCAIn×Seigniorage))DCM Market Value\large \mathrm{DCM} = \frac{(\mathrm{DUCA_{In}} - (\mathrm{DUCA_{In}} \times \mathrm{Seigniorage}))}{\mathrm{DCM\ Market\ Value}}

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