In recent weeks and months, the Defichain community has been heavily engaged in discussions about the uncollateralized dTokens. Suggestions ranged from minimal changes to drastic redesigns. As a known advocate of conservative investing, I am among the fundamental critics of the current system.
Unfortunately, the discussion has sometimes deviated from rationality, and it seemed that critics were being silenced with irrelevant arguments. Disappointed investors/speculators, who were frustrated by the poor performance of DFI and the coin whose name cannot be mentioned, also joined the ranks of the critics.
The discussion revealed that while many prefer a collateralized system in our DEX instead of an mostly uncollateralized dToken system, very few are willing to pay the price for the transition. Unfortunately, critics cannot perform magic and transform the uncollateralized coins, whose underlying value has already been depleted through the repayment of loans with DFI in 2022, into collateralized assets, thus generating value out of thin air.
Even the proposed alternative for a successor dToken system was discussed, or rather, criticized, as individual components were attacked, leading to the rejection of the entire concept. This once again demonstrates the difficulty of democratically discussing the various visions for a new concept.
I was delighted to learn that a small team has taken on the task and presented the Jellyverse concept, which provides everything we need in the Defichain ecosystem. thanks to Defimetachain and EVM, the concept utilizes a proven and audited credit system (Liquity) without the need to reinvent the wheel.
Have the issues of the dToken system suddenly disappeared?
No, they haven't. However, the situation now appears as follows:
A) We have the existing dToken system with algorithmic partial collateralization and futureswaps as a regulatory element to maintain DEX prices within a reasonable range of the oracle price. While the individual tokens are not fully collateralized, they reflect the price of the underlying assets within a +/- 5% range around the oracle price, making them suitable for short-term trading. The current trading challenge clearly demonstrates the substantial profits achievable on Defichain even without full collateralization.
B) Long-term investors who seek value-backed tokens simply need to wait a few more weeks and then enter the Jellyverse. The jUSD will be 110% backed by freely tradable and arbitrable coins, automatically liquidated in case of price declines to ensure investor value is safeguarded.
For investors seeking an alternative to USDT or USDC with the coin whose name cannot be mentioned, there are two options: either one hopes that the buy-and-burn bot purchases and swap actions will prevail over the selling owners, or one separates from it now to directly invest in DFI and later in the fully collateralized jUSD.
For me, the discussion is largely concluded as I have divested myself of my investment dTokens. For short-term trading, I can always rely on the "old" system to a limited extent. With the emerging alternative Jellyverse system on Defichain (DMC), the need for reforming the current dToken system, which remains suitable for trading even without full collateralization, is no longer necessary. If there is little interest in trading during bear markets, the price of the coin whose name cannot be mentioned will decline, and when interest revives during bull markets or neutral sentiment (through the BBB), the prices will rise again. The dAssets will continue to trade within the +/- 5% range or return to it weekly.
If we accept this situation, we no longer have a problem that needs constant discussion.
In that spirit, let us look into a bright future: #roadto50.
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