The DEIP Network implements a dynamic liquidity protocol to provide additional liquidity mechanisms for intangible assets in the network. Dynamic liquidity protocol allows borrowing stablecoin dX from the protocol in exchange for tokenized intangible assets locked as collateral. dX is a decentralized multi-collateral backed stablecoin with F-NFT as underlying assets and soft-pegged to a fiat currency. The price of fiat currency is provided to the network via price feed (price feeds provided to the network via Chainlink oracles). In the DEIP Network, anyone can mint a stable token dX (e.g. dUSD, dEUR, dCYN, etc.) by collateralizing F-NFTs and locking them into a special smart contract (Vault). In order to mint X amount of stable tokens, the total value of assets locked into the collateral smart contract has to be , where K is the default collateralization coefficient and is dynamic adjustment coefficient. The default collateralization coefficient is K=3 (300% of the locked underlying assets value), therefore to borrow 1M dUSD tokens the borrower has to put $3M of the value of F-NFT tokens as collateral to a Vault. The actual collateralization coefficient is adjusted dynamically (via component) and can change over time taking into account recent transactions with F-NFTs, F-NFT issuer track record, issuance platform, recent licensing transactions, and payouts of a specific F-NFT from the collateralization bucket. To withdraw the assets from a Vault smart contract the borrower needs to settle/pay the full amount of borrowed dX tokens plus a stability fee (interest rate). Stability fee is paid to the network and distributed 50/50 between yield farmers and Ecosystem Fund. The stability fee is set via the network governance mechanism.
Image 4: Vault structure.
Image 4.1: Dynamic Liquidity Protocol Workflow