# DUSD Stablecoin

DUSD is DI Network's over-collateralized algorithmic stablecoin, serving as the base currency for all protocol operations and maintaining its $1 peg through robust collateralization mechanisms.

## Overview

DUSD combines the stability of over-collateralization with the flexibility of algorithmic design:

{% @mermaid/diagram content="flowchart TB
A\[DUSD Stablecoin] --> B\[Over-Collateralized]
A --> C\[Multi-Collateral]
A --> D\[Interest Bearing]
A --> E\[Cross-Chain Native]

```
B --> B1[125% Min Ratio]
B --> B2[Liquidation Protection]
B --> B3[Oracle Pricing]

C --> C1[DI Token 75%]
C --> C2[WBTC 70%]
C --> C3[WETH 70%]
C --> C4[USDT/USDC 90%]

D --> D1[5% APR Interest]
D --> D2[Continuous Accrual]
D --> D3[Flexible Repayment]

E --> E1[6 Networks]
E --> E2[Unified State]
E --> E3[Cross-Chain Transfers]" %}
```

## Key Features

### Stability Mechanism

* **Over-Collateralization**: Minimum 125% backing
* **Oracle Pricing**: Real-time collateral valuation
* **Liquidation Engine**: Automated position management
* **Interest Rates**: 5% APR encourages repayment

### Multi-Collateral Support

* **DI Token**: Primary collateral (75% factor)
* **WBTC**: Bitcoin exposure (70% factor)
* **WETH**: Ethereum exposure (70% factor)
* **USDT/USDC**: Stable collateral (90% factor)

### Cross-Chain Functionality

* **Native Deployment**: Available on all 6 networks
* **Unified Supply**: Same token across chains
* **Bridge Integration**: Seamless cross-chain transfers
* **Gas Payments**: Use DUSD for transaction fees

## Core Functions

### 1. Stability Mechanism

Maintains $1 peg through over-collateralization and market mechanisms.

{% content-ref url="dusd/stability" %}
[stability](https://doc.dinetwork.xyz/core-infrastructure/dusd/stability)
{% endcontent-ref %}

### 2. Collateral Management

Comprehensive system for managing multiple collateral types.

{% content-ref url="dusd/collateral" %}
[collateral](https://doc.dinetwork.xyz/core-infrastructure/dusd/collateral)
{% endcontent-ref %}

### 3. Interest Rate Model

Fixed 5% APR interest rate system with continuous accrual.

{% content-ref url="dusd/interest" %}
[interest](https://doc.dinetwork.xyz/core-infrastructure/dusd/interest)
{% endcontent-ref %}

### 4. Liquidation System

Automated liquidation engine protecting protocol solvency.

{% content-ref url="dusd/liquidations" %}
[liquidations](https://doc.dinetwork.xyz/core-infrastructure/dusd/liquidations)
{% endcontent-ref %}

## Use Cases

### Trading Base Currency

* **Synthetic Assets**: Mint xBTC, xETH, xAAPL with DUSD
* **Perpetual Trading**: Use as collateral for leveraged positions
* **Spot Trading**: Direct trading pairs with synthetic assets

### Cross-Chain Operations

* **Bridge Currency**: Transfer value between networks
* **Gas Payments**: Pay transaction fees across all chains
* **Liquidity Provision**: Provide liquidity in various pools

### DeFi Integration

* **Lending**: Lend DUSD in external protocols
* **Yield Farming**: Participate in yield farming opportunities
* **Arbitrage**: Exploit price differences across chains

## Economic Model

### Supply Dynamics

{% @mermaid/diagram content="flowchart LR
A\[Collateral Deposits] --> B\[DUSD Minting]
B --> C\[Protocol Usage]
C --> D\[Interest Accrual]
D --> E\[DUSD Repayment]
E --> F\[Collateral Release]
F --> A" %}

### Revenue Generation

* **Interest Payments**: 5% APR on all borrowed DUSD
* **Liquidation Penalties**: 5% bonus on liquidated positions
* **Trading Fees**: Indirect revenue from synthetic trading

### Peg Maintenance

* **Arbitrage Opportunities**: Price deviations create profit opportunities
* **Protocol Reserves**: Emergency reserves for peg defense
* **Market Making**: Automated market making for stability

## Risk Management

### Collateral Risk

* **Diversification**: Multiple collateral types reduce concentration risk
* **Conservative Ratios**: Lower collateral factors provide safety buffer
* **Oracle Security**: Dual oracle system prevents price manipulation

### Systemic Risk

* **Over-Collateralization**: System-wide collateral exceeds DUSD supply
* **Liquidation Engine**: Automated risk management
* **Insurance Fund**: Protocol reserves for extreme scenarios

## Integration Examples

### Basic DUSD Operations

```javascript
import { DINetwork } from '@dinetwork/sdk';

const di = new DINetwork({ chainId: 1, provider: window.ethereum });

// Check borrowing capacity
const capacity = await di.dusd.getBorrowingCapacity(userAddress);

// Mint DUSD with DI collateral
await di.dusd.mint({
  collateralToken: 'DI',
  collateralAmount: ethers.parseEther('1000'),
  dusdAmount: ethers.parseEther('750')
});

// Repay DUSD
await di.dusd.repay(ethers.parseEther('750'));
```

### Position Management

```javascript
// Check position health
const position = await di.dusd.getPosition(userAddress);
const healthFactor = await di.dusd.getHealthFactor(userAddress);

// Add collateral
await di.dusd.addCollateral('DI', ethers.parseEther('500'));

// Partial repayment
await di.dusd.repay(ethers.parseEther('100'));
```

## Monitoring & Analytics

### Key Metrics

* **Total Supply**: Current DUSD in circulation
* **Collateralization Ratio**: System-wide backing ratio
* **Peg Stability**: Price deviation from $1.00
* **Interest Accrued**: Total outstanding interest
* **Liquidation Rate**: Frequency of position liquidations

### Health Indicators

* **System Health**: >150% collateralization (healthy)
* **Peg Stability**: <2% deviation from $1.00
* **Liquidation Frequency**: <1% daily (stable)
* **Interest Coverage**: Sufficient reserves for operations