Introducing the Duet Protocol 3.0 Series
This article is part I of the Duet Protocol 3.0 Series. If you are interested in reading more, follow Duet medium.
Part 1
- Vision
- Challenges
- Introduction
- Overview
Part 2
- Key components
- Value propositions
- Utilities of DUET
- Duet Bond
Part 3
- Roadmap
- Token Allocation
- User guide
- F&Q
Looking ahead, as the “bubble-focused” nascent crypto industry matures, mass adoption of blockchain technology is inevitable. Mindsets of users in the crypto industry will transition from gamblers to investors, as such, they will seek to invest rather than to speculate. We wish to create real value, unleash the liquidity of the illiquid assets, and play the Duet for both the real world and the metaverse.
Challenges
As blockchain technology and decentralized finance become increasingly adopted in a multi-chain environment, an inevitable challenge is the segmentation of liquidity, where the liquidity of the crypto market is spread on different blockchain’s and different DeFi protocols.
As an emerging asset class, receipt tokens like Uniswap LP tokens or compound deposit receipts, are illiquid and poorly utilized as a financial asset. We call those sorts of idle assets which are not capital efficient “Flat Assets ”.
The “core assets” of Web3.0 need better accessibility, transparency, and programmability, this is what we call “Sharp Assets”. From a technical standpoint, most of the crypto tokens are equipped with those privileged features while most of which are either too stable or too volatile. Under such circumstances, the investors are forced to adopt the single “Barbell Strategy”(to invest in the two extremes of high-risk or stable assets with no middle-of-the-road choices available. Since the industry simply lacks the assets with an alternative risk profile to add into their portfolios.
Another challenge that DeFi protocols struggle with is how to attract long-lasting liquidity in a sustainable way. In Duet protocol, to bootstrap our community while mitigating the huge selling pressure, we decide to allocate our native tokens in an innovative form — — ”Duet Bond”.
Introduction
Duet Protocol (Duet) is a synthetic asset protocol built on a capital reserve system that unleashes liquidity to DeFi protocols. Duet treats single assets such as BTC/USDT/DAI and receipt tokens such as WBNB-BUSD LP as collateral and credits users with liquidity in the form of synthetic stablecoins and other synthetic assets. In the long run, it’s the DAO community members (who own the DUET/DUET bonds or other governance tools) that pick collaterals to include and synthetic assets to supply through voting.
As shown in the graph below, Duet protocol aims to set up a multichain compatible technological and financial infrastructure. In the C major phase, Duet protocol is more like a matching synthetic asset protocol built on a liquidity aggregator with a focus on the stablecoin dUSD, in D major phase, we will evolve into a cross-chain order book aggregator which enables the frictionless swap of assets.
Imagine a world where you can open an asset account anytime, anywhere in the world, borrow cash against your assets anonymously in a second, earn more assets for lending it to a short seller, own a tiny piece of an indivisible asset like a house/a NFT or even program your asset so that an unmet stranger can conduct any kind of business with you without either one of you worrying to be cheated. These are just some of the privileges that are already making a reality with blockchain technology and Duet Synthetic Assets.
By connecting the fragmented liquidity on-chain, Duet enables investors to allocate assets and manage risk exposures of different asset classes, in just one cryptocurrency wallet. These synthetic assets are an upgraded version of their previous form, as properties like availability, divisibility, and programmability are enabled by blockchain technology.
As a decentralized organization, Duet protocol will be governed by Duet DAO. Although the technical infrastructure is provided by the protocol, it is the DAO that shapes the future of the protocol by voting on matters like collaterals to accept, synthetic assets to supply.
Overview
In a nutshell, the Duet protocol is a synthetic assets minter built on a Yield Aggregator that automates the process of yield farming, maximizes its returns, and releases additional liquidity to the users. In the short run, the receipt token holder can enhance their returns by utilizing stablecoins minted with Duet protocol; in the long run, our vision is for the Duet protocol to be the entry point of liquidity providing, the reserve capital system that supplies liquidity to almost all DeFi protocols whilst generating a world of synthetic assets whose values are 100% backed by its reserves.
When a receipt token is supplied, it is held by the Duet Yield Enhancer, which will automatically reinvest any income associated with the receipt token to maximize return.
When an unwrapped token, such as an ERC 20 token is supplied to the Duet protocol, it can be used directly as a reserve capital to mint synthetic assets or be wrapped in any of the supported receipt tokens to generate additional yield.
Receipt tokens including but not limited to swapping LPs, PoS farming receipts, saving receipts, governance staking receipts will be gradually supported by the protocol as a reserve asset. Other crypto assets like public chain native tokens, ERC 20 tokens will also be supported.
BSC Main network
ETH Main network
Users who have provided capital to the reserve could mint any supported synthetic asset with the Duet Minter. Investors seeking long exposure to the synthetic assets could also buy it directly on the Duet Swap in the near future.
Gradually, Duet will roll out different asset classes including but not limited to Metaverse ETFs, SocialFi Indexes, cryptos, and leveraged positions.
With synthetic assets, users can trade them in swaps, mine rewards by staking them in various farm pools, or hold them in wallets to simply gain exposure.
We are going to cover the key components, value propositions, DUET, and Duet Bond in the following articles, Stay tuned!
