DUCA: Incentives
DUCA Yield
DUCA Yield is automatically distributed to all DUCA holders. DUCA Yield is designed to be accessible for all, so no locking or staking is required. DUCA Yield is derived from fees within the protocol that are deposited into the Treasury Fund. DUCA Yield is dynamic and sustainable.
How is DUCA Yield Determined?
DUCA Yield serves as a passive incentive for all DUCA holders, requiring no active effort beyond holding the asset. The source of DUCA's yield is the Treasury Fund. Every day, the available amount of DCM in the Treasury Fund, evaluated over a 200-day period, determines the amount of DCM that can be used for yield. When the Fund has less DCM, the yield automatically lowers and vice versa. This also means the actual yield is tied to the DUCA Market Cap. Designed to balance DUCA's growth with market dynamics, ensuring long-term sustainability, directly linked to the protocol's financial health.
Where does DUCA Yield come from?
The DUCA distributed as yield to its holders is minted using DCM, adhering to the same process as regular DUCA minting. This approach ensures that the DUCA Yield generation is grounded in the protocol's economic model without resorting to creating value out of nothing. It's a transparent and sustainable method, avoiding any underhanded tactics or inflationary practices. This reinforces the integrity and reliability of DUCA Yield, ensuring that the value it provides to holders is both real and sustainably managed.
The DCM used for minting DUCA Yield comes from the Treasury Fund. This fund accumulates DCM from three distinct sources:
Seigniorage: A fixed percentage over the Stability Fee.
Par Value Calibration: Involves adjustments to align the Par Value with market dynamics, contributing DCM to the fund.
Treasury Fee: A fee that supplements the Treasury Fund under certain conditions.
These varied sources ensure a steady flow of DCM into the Treasury Fund.
SEIGNIORAGE & DUCA YIELD
The Stability Fee, paid by either the Stability Pool or DCM owners, contributes 50% of its amount as Seigniorage to the Treasury Fund. This means LPD owners and DCM holders indirectly support the Treasury Fund through these fees, with half the fee contributing to the fund.
PAR VALUE CALIBRATION & DUCA YIELD
Par Value Calibration keeps the Par Value in sync with market dynamics. The DCM tokens removed from circulation in this process are added to the Treasury Fund. This method ensures that tokens are used efficiently for DUCA Yield without causing market inflation.
TREASURY FEE & DUCA YIELD
The Treasury Fee ensures that the Treasury Fund receives a minimum amount of DCM. The fee is sourced from the Stability Pool and DCM owners. It has a fixed component and a dynamic component that is subject to the actual DCM market value.
DCM & LPD OWNERS & DUCA YIELD
The three components form the basis of the contributions to the Treasury Fund, relying on fees charged within the protocol and from DCM and LPD owners. This approach ensures a sustainable model for yield generation.
Key mechanisms that underpin this balance include:
Treasury Fund's 200-Day Evaluation: The Treasury Fund is assessed over a 200-day period to determine the daily availability of DCM. This amount calculates the DUCA Yield, which is then distributed as a proportion of the DUCA Market Cap. The yield is set based on the current DUCA Market Cap, valuing DCM against the Par Value, with a ceiling of 100% yield. This model emphasizes that the DUCA Yield is dynamic and sustainable.
Adaptive Treasury Fee: The Treasury Fee dynamically adjusts in response to the DCM Market Value and the size of the Stability Pool. This flexibility maintains the attractiveness of DCM and LPD for holders. By aligning the fee with market conditions, the protocol avoids excessively high fees that could discourage ownership, striking a delicate balance between maintaining investment appeal and protocol stability.
This design allows the open market to dynamically establish the DUCA Yield, moving towards the protocol's ambitious goal of achieving a market cap comparable to leading global currencies. In this framework, the DUCA Yield is a reflection of market dynamics and the protocol's unique design, rather than a fixed predetermined figure.
DUS Yield
DUS is a US Dollar-pegged DUCA-Backed Asset and its reserve consists of DUCA. As stated above, DUCA generates Yield for all its holders, which includes the DUS reserve. This results in the DUS Reserve growing in collateral over time and effectively pegs the DUS Yield to the DUCA Yield. The excess collateral in the DUS Reserve is minted into DUS and distributed to all DUS holders. Additionally, if the value of the US Dollar lowers compared to DUCA, the collateral level increases, turning the lowered value of the USD into DUS Yield, effectively hedging the US Dollar.
DCM & LPD Incentives
The Stability Fee is a dynamic fee. Depending on the status of the mechanisms active in the Incentive Structure, the Stability Fee charges LPD owners or DCM owners. The Stability Fee can be positive, zero or negative. In case of a positive Stability Fee, the collected DCM from the wallets via the rebase mechanism will be added to the liquidity in the Stability Pool, influencing the lpRate. When the Stability Fee is negative the DCM will be distributed from the liquidity in the Stability Pool to the owners of DCM.
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