Updates on DEI Bonds

Lafachief
6 min readSep 9, 2022

Important news for IL-affected users from providing Liquidity into bDEI/DEI pools, as well as nonNFT-bDEI holders, as well as legacy DEI bonders.

bDEI / DEI LP has been taken offline

On 04.09.2022, we have taken the bDEI/DEI swap offline to reduce the massive IL risk people were facing, we also started reducing the overall rewards (across all of staking pools).

Rewards for bDEI/legacyDEI LP staking will be zeroed and a new pool will be opened in the future bDEI/DEI (fully collateralized DEI next 1–2 months). The best staking option for the foreseeable future will be vDEUS.

The rationale behind the closing of the bDEI LP pool

The pool puts users at a massive risk of suffering a permanent loss until their maturity date arrives.
LPs have already suffered IL up to 60% and to limit the increasingly greater imbalance that will be suffered going closer/after the redemption of bDEI has started.

we only saw an option of closing the pools completly.

TL:DR

In order to mitigate losses the bDEI LP pool was closed and snapshots taken. (we advice everyone to facilitate no more OTC / trades of bDEI or NFTs.)

What was the reason for the pools in the first place?

The pool was created for legacyDEI <> bDEI exposure. After the migration to a new DEI, the pool served no purpose anymore, and the risk of people suffering immense IL outweighs the rewards.

When was the snapshot taken?

The first snapshot was taken on 02.09.2022. Another one was taken on 09.09.2022.

(data from below is based on snapshot of 02.09.2022
&could be a little bit different, if people traded OTC, please DO NOT facilitate ANY OTC trades of bDEI or bDEI NFTs AFTER this announcement.)

The different type of bDEI Holders:

People that sold bDEI

There is -1,268,825.96 bDEI that was completely sold.

This is extremly beneficial for IL-affected users and nonNFT-bDEI holders. Selles will not be able to migrate, increasing the share for holders.

“IL-affected” users

“IL-affected” users are those that have suffered IL and have too much NFT.

The number of IL suffering bDEI holders is at 3,192,206.05 NFTholding 2,147,250.46 bDEI(67%.)
“IL-affected” are having 33% less bDEI.

In total there is a deficit of -1,044,955.59 DEI for “IL-affected” users, our goal is to close this deficit with protocol surplus until the 8th of June 2023, until then staking rewards in the form of vDEUS can be accrued,

On top of that IL-affected users will always have the choice to migrate their bDEI to vDEUS at 1:2 ratio. (if there is enough vDEUS supply for migration)

important note:
if you bought bDEI AFTER this announcement was made, the amount could not be credited.

Users with not enough NFT we will call these “nonNFT-bDEI” users.

“nonNFT-bDEI” users are those that have bought bDEI directly from the LP pool accidentally without creating an NFT in the process.

bDEI holders without NFTs are still looking at an almost 7 month period until their bDEI would mature and DEI can be withdrawn. The exact date for bDEI unlocks without NFT are dated to the 8th of june 2023, our goal is to be able to migrate all bDEI to DEI until that period is over.

In total 2,480,004.08 bDEI are held by users with only 169,776.18 in NFTs.

That’s a deficit of 2,310,227.90 DEI, our goal is to close this deficit with protocol surplus until the 8th of june 2023.

until then staking rewards in the form of vDEUS can be accrued,

On top of that,”nonNFT-bDEI” users will always have the choice to migrate their bDEI to vDEUS at 1:2 ratio.

important note:
if you bought any bDEI NFT AFTER this announcement was made, the amount could not be credited.

What options do you have as nonNFT-bDEI or IL-affected user?

Wait until protocol surplus is generated &stake your bDEI to get staking rewards for it in the form of vDEUS.

Migrate your bDEI to vDEUS at 2:1 ratio to become liquid instantly.

What about the DEI part of your LP provided amount?

We will also give users that provided LP the chance to move their DEI portion (even without NFT) to vDEUS 2:1.
When you already migrated you will be able to double your vDEUS.

All of this is planned to go live in October, as we decided that it’s not doable to work on all of those cases manually.

How much surplus can be expected?

We will start using the excess DEI to seed initial liquidity on v3 & explore other exogenous yield opportunities to create an immediate surplus for nonNFT bDEI holders so they will be able migrate at the end of the period of the bDEI maturity, which is the 8th june in 2023.

This means there is ~4m protocol-owned liquidity that will be used to farm rewards & to seed v3 liquidity. All fees will go to bDEI holders WITHOUT NFT.

We have already created a 250,000 surplus since redeployment of DEI.

there has been 9m DEI minted at 10% seigniorage and 25% bDEI.
Meaning bDEI holders without NFT share that would already be 250k DEI that will 2:1 swap for your DEI.

Examples of swapping to 1:2 vDEUS,

Everyone who is a nonNFT-bDEI or IL-affected user will be able to swap his missing amount to vDEUS at a 1:2 rate (we will create an frontend for this in the next 30 days.

Example 1:
You got 100,000 bDEI but only an NFT for 10,000 bDEI, you will have the chance to swap 90,000 bDEI 1:2 to vDEUS as soon as the frontend for it is launched.

The rest of 10,000 bDEI you will be able to migrate to DEI after maturity of your bDEI bond.

Example 2:

You got 100,000 worth of NFT but only 50,000 bDEI, you will get the chance to migrate your 50,000 bDEI to 50,000 DEI additionally you will be given 50,000 bDEI back (to close the gap of your NFT), that you can then keep until surplus is generated (maximum 8th of june 2023.) or you can swap it to vDEUS at 2:1.

Example 3:

You provided liquidity with 50,000 DEI and 50,000 bDEI you dont own an NFT, you will be able to keep your 50,000 bDEI to wait for protocol surplus and swap the 50,000 DEI to vDEUS at 2:1.

What next?

when will I be able to migrate bDEI, or swap my DEI to vDEUS?

We are planning to launch the frontend with all the above mentioned features in october, as a manual processment of these edge cases is a lot, in total we have been contacting 50 people whereof only 10% actually were interested in swapping to vDEUS at a 2:1 rate.

If you are sure you wanna swap to vDEUS and you have your bDEI or DEI amount ready, or you already swapped you can contact me but please in order to make it easier for me give me the following information:

This helps us to figure out all the edge cases to create the UI properly.

For LPs that wanna migrate the DEI portion of their LP:

Transaction hash when you deposited the LP.

Transaction has when you withdrew the LP.

Amount of DEI that you wanna swap to vDEUS.

Then we will do a vDEUS <> DEI swap on 1inch.

For IL affected user that wanna get the deficit of their bDEI holdings to their NFT amount as vDEUS.

Send me the transaction of your bDEI NFT creation.

Send me the transaction hash when you deposited the LP

Send me the transaction hash when you withdrew the LP.

The difference of bDEI to your NFT can be credited as vDEUS.

For nonNFT-bDEI users, that wanna swap their bDEI to vDEUS.

Tell me the amount you think you should be able swap.

For people that already minted vDEUS, please send all the above mentioned details + the transactions where vDEUS was redeemed.

We ask you to wait until the frontend has been created, which is estimated to be finished in october, in order to decrease the workload on the team, thank you for your understanding.

Unlisted

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