“What makes Blockchain revolutionary, are the connected data blocks and what if you can track value of every asset on Blockchain and speculate on ?”
In Part 1 of the series, we learned that Synthetics via blockchain can track the value of traditional finance assets by reflecting them digitally on blockchain.
In this post we will cover the following :
- What is DimSum ?
- The architecture and examples of DimSum Synthetics
- Risks example
- Governance & community owned Treasury
- Tokenomics of DimSum
What is DimSum ?
DimSum(DMS) is the token of DimSum Synthetic assets developed by Panda DAO on top of Binance Smart Chain. DimSum synthetics will be used to track value of any assets and provide you the return on investment without actually holding that asset.
The goal of DimSum protocol is to evolve into a fully decentralized easy to use synthetic assets platform, governed by the community. When we mention synthetics, we refer to all asset class possible and not limited to just Stocks. We will be rolling out Synthetics category by category. In Q3, DimSum users will be able to mint synthetics using DimSum LP tokens and also trade on stocks & commodities synthetics.
Architecture of DimSum :
The DimSum(DMS) ecosystem, will be built using different platforms and complex smart contracts that work together integrating Oracles like Band Protocol and Chainlink.
The first step in building a powerful Synthetix platform is organization of vast data and to retrieve the data sources faster, we will be building APIs using “The Graph” and combining the same with Oracles (Band Protocol / Chainlink) will enable more opportunities for our developers to use indexed data sets to build powerful, truly decentralized applications.
Multiple oracles will be used to minimize risk, which we will discuss later on in the post.
There will be multiple smart contracts involved to allow seamless creation of any assets by DimSum users and also trade on synthetics. Technical workings of smart contracts will be added in our Gitbook as we proceed towards the main net, DimSum synthetics will be live by Q3 on BSC Blockchain.
The real thing : Usecase
Let us take two simple examples below to understand how Synthetics actually work.
Example 1 : Synthetics Long & Short
In the example above lets take a simple scenario.
Paul and Rose wants to speculate on the price of Gold. To speculate and trade on gold, they actually do not have to buy Gold from the market, one of them can still benefit from the volatility in price of Gold asset. Only thing, they need to do on DimSum platform is pur DMS-LP tokens as collateral.
Lets say they both put DMS LP = 10 as a collateral to trade on Synthetic Gold, stored on blockchain as dGold.
Paul opens a 4X long on gold for 24 hours and price of gold increases by 10%, that means Paul would benefit 4 times 10% ie. 40%. Now Paul would have $140 in his wallet.
Let us take the example of Rose, who did the opposite of Paul, she opened a SHORT 4x on the price of dGold, that means she expected it to go down, but it went up by 10% in 24 hours, so Rose had a 4X margin loss i.e 4 X 10% = 40%, so overall, Rose will suffer 40% loss on her speculation.
Now imagine, you can speculate on any created synthetics on DimSum, with different Long & Short positions. This can be very risky for beginners, but very profitable for experienced traders.
Example 2 : Investing in Tesla Stocks
Using DMS tokens or LP, users will be able to speculate and trade on stocks such as Tesla on our platform. Please go through the above scenario and below steps, at least twice as it can be a bit complex at first to understand.
Please note the value of stocks and DMS tokens are just assumptions to simplify the methodology.
- Cindy and Nick each puts 1500 DMS as collateral
- Each of the collateral results in 150 € worth of DimSum synthetics denoted by dEUR
- Total debt to the system is 150 € + 150 € = 300 €
- Cindy is smart and wants to speculate on Tesla stocks, so Cindy invests 150€ worth of dEUR on dTESLA stocks and receives 150 dTESLA, while Nick has already borrowed dEUR of 150€, but doesn’t invest in anything.
- Tesla stock goes upto 3X, now total worth of Cindy’s is 150 € X 3 = 450 €
- Nick’s worth remains unchanged as he did not invest in anything.
- Now Total Global debt of the system = 450 € (Cindy)+ 150 € (Nick) = 600 €
- As both of them started there journey together with 50% debt each in step 3, now also they have to share 50 % debt, even if Cindy has earned 3X profit. Cindy’s share in debt 50% : ie 300 € , resultant profit is 150 €
- However, even if Nick did not invest his dEUR, but he has to share the debt of 50% which is 150 € — 300 € = — 150 €, which gets deducted from Nick’s collateral.
So using synthetics, you can mint any currency and use that currency to trade stocks. It is a complex system, but we will bring easy to use guides and applications in our Q3 to bring traditional users to DeFi.
There are multiple other ways by which a user can benefit trading synthetics, we will covering those in our posts later on, when the platform is about to be released in Q3.
Risks associated with System :
According to below report, Synthetix Protocol, experienced an oracle attack which netted the attacker over 37 million sETH.
This basically means that there was a wrong price feed from Oracle service, which presented a wrong price data to the arbitrage bot, and the bot was able to take advantage of wrong price resulting in attack of 37 Million.
This type of risk can only be avoided, if the system can always be at consensus of the right price data feeds, that is why we will be using multiple Oracle services, ensuring that the price feeds are always in sync and correct, to avoid any possible risk.
There are also other possible risks involved, for which we will create a separate dedicated post as there are many other processes involved to understand those risks associated with Synthetic assets.
Governance & Treasury :
DimSum treasury will own, some share of DimSum and fees generated from the system.
DimSum treasury will be fully governed by the community and community will decide on where the funds generated should be used on.
Fully functional voting page will be live by April, where community would be able to vote on different proposals.
Tokenomics :
As promised, PDAO holders and liquidity providers will be eligible for DMS airdrop in 1:0.5 and 1:1 ratio respectively.
Airdrop Allocation : 60 Billion to 70 Billion, depends on snapshot
Presale : 541 Billion
Farming rewards : 550 Billion
Maximum of 1.5 Trillion tokens can be minted.
Our farming mechanism is very sustainable, expected circulating supply will be around 610 Billion till 50 weeks.
More details on emission of farming rewards and mechanism will come in another detailed post before the farming starts on 23.03.
Exchanges :
As you have asked us a lot about exchange listing, we are working hard non stop. We have very big plans when we envision, what DimSum can be and its potential.
Our goal is to list DimSum on Tier 1 listing within a year, which is achievable with developments and hard work, but to boost Panda Dao presence and on our community multiple requests, DimSum will be listed on at least 2–3 CEX by April 2021.
Next post will be about our DimSum presale, which will be live via unicrypt.network on 20.03.2021 16:00 UTC.
