two-tokens, one NFT

  1. DYAD: overcollateralized stablecoin backed by wETH, LSTs, LRTs etc
  2. Kerosene: erc20 token with deterministic value (exogenous TVL - DYAD supply) / Kerosene supply
  3. Notes: erc721 NFTs that are required for depositing collateral and minting DYAD. Notes contain a single position comprised of a backing collateral basket and the DYAD debt minted against it.

Flow

  1. Claim a Note. There is an unlimited supply, and each claim costs .001 ETH more than the previous claim.
  2. Deposit exogenous collateral and Kerosene, if you have any, to mint DYAD against their combined USD value. 150% MCR
  3. Supply DYAD to external liquidity pools and / or single-sided staking to earn Kerosene. This uses standard liquidity mining logic
  4. Deposit Kerosene alongside the exogenous collateral in your Note to mint more DYAD and / or increase your CR further above the 150% liquidation threshold.

You must have at least $1 of exogenous non-Kerosene collateral per DYAD that you mint. Beyond that, you can increase your backing collateral with as much Kerosene as you’d like.

  1. Kerosene Binding: you can choose to permanently bind Kerosene tokens to your Notes. This makes each bound token count as two normal Kerosene tokens

(TVL - DYAD supply) / (Kerosene erc20 supply + 2x (bound Kerosene supply))

Binding also means that the Kerosene can no longer be transferred independently of the Note. Binding is irreversible

A Note’s amount of bound Kerosene will be the primary driver of its secondary market value, and binding will be the primary Kerosene supply sink

Governance

For governance (adding new collateral types and allocating kerosene emissions) we are weighing notes by their relative portion of bound Kerosene.

However governance power per bound Kerosene decays by (Note’s bound Kerosene / total bound Kerosene)^2. This disincentivizes power concentration in Notes and incentivizes spreading Kerosene binding across Notes.

Binding is irreversible so even if you don’t care about governance, concentrating Kerosene will impact the secondary market value of your Notes. This drives demand to Notes and checks Kerosene concentration in single Notes.