DUCA Market Maker

Protocol-owned liquidity

What is the DUCA Market Maker?

The DUCA Market Maker ("DMM") is an Automated Market Maker that contains the protocol's liquidity pools and is fully integrated into the DUCA Protocol. The DMM is the primary avenue through which the open market can access and interact with the protocol’s native tokens, facilitating the exchange of DUCA, DCM, LPD & DUS.

Interaction with the core of the Protocol occurs solely through these tokens, by entry, exit, or holding actions. Every user action directly influences the supply dynamics of the tokens, to which the Protocol autonomously responds.

ALL USER ENGAGEMENT WITH THE PROTOCOL IS THROUGH THE TOKENS

Users can't interact with The Core of the Protocol directly. All engagement and influence are through the tokens by entry, exit or holding one or more of the tokens. All interactions have a direct influence on the various token supplies to which the Protocol responds autonomously.

Why do we need the automated DUCA Market Maker?

1. To provide the open market with access to all the native tokens of the Protocol via USDC and through deep liquidity.

2. The DMM gives the Protocol control and ownership over the liquidity to maintain autonomy and integrity because there is no liability to 3rd party providers of liquidity or infrastructure.

3. The workings of the DMM and the protocol-owned liquidity provide the Protocol with a sustainable business model.

4. The DMM collects price feeds and market data that informs the Protocol.

How does the DMM work?

The DMM is designed without a direct user interface for accessing its liquidity pools. Instead, transactions are facilitated through the DUCA swap function, and potentially, DEX aggregators in the future. This configuration ensures that all market interactions are seamlessly automated and synchronized with fluctuations in token supply. Users engage with the protocol by swapping tokens they hold for any of the protocol’s native tokens—this interaction triggers automatic adjustments within the protocol, ensuring that token supply and market dynamics are always aligned.

DEEP LIQUIDITY

All liquidity in the DUCA Market Maker is owned by the protocol. The funds required to provide this liquidity will come from the DCM distributions and will be owned by the Protocol and stored in the DMM Fund.

Users are not able to provide liquidity in the DUCA Market Maker. This setup allows for manual adjustments to liquidity levels, ensuring the protocol's responsiveness to market needs without user-provided liquidity. Initially, the DMM aims for a liquidity level that is between 50% and 100% of the DUCA market presence, adjusting down as the market cap grows.

The minimum TVL of the DUCA Market Maker is 20% of the DUCA Market Cap with an initial maximum total value of 2B DUCA. Hence, this maximum will be reached at a DUCA Market Cap of 10B DUCA. The liquidity in the DMM will start with a much higher percentage, 100% or more and gradually lower towards 20% depending on market dynamics.

The USDC present in the DMM is liquidity that creates excess over-collateralisation. It represents a form of out-of-pocket cash that does not have to rely on the Protocol to stabilise DUCA. Since the minimum amount of collateralisation in the Protocol is +200%, the addition of 100% in USDC in the DMM makes a total of +300% of collateral backing for DUCA and +302% for DUS.