GM, GM, crypto fam! Welcome to your number one source for everything crypto, DeFi, and all that's in between. If you want to know what's going on in the world on-chain, well, you've come to the right place.

This week's episode we have on Joey Roth, the founder of DYAD, who joined the podcast to share what he's been building since DeFi Summer. In a time where everyone's kind of jaded by forks and copycat projects, it's refreshing to see actual DeFi stablecoin experimentation.

And get this - DYAD is live on ETH mainnet. With mainnet gas being as low as it is, hey, this is quite the attractive option to go play around with stablecoins.

Now, let's break down how DYAD is shaking up the stablecoin game and why it might just be the next big thing in DeFi.

DYAD: The Stable Coin That's Putting Kerosene in the Flywheel

Let's dive into what DYAD is trying to fix in DeFi: the overcollateralization requirement for stablecoins.

Traditional decentralized stablecoins typically demand users to lock up substantially more capital than they're minting. It's a bit like needing to deposit $1.50 to withdraw a single dollar, which isn't exactly efficient.

DYAD is has developed a system where users can mint interest-free stablecoins against collateral like ETH, with a minimum collateral ratio that can go as low as 100%.

Now, it's important to note that DYAD doesn't start off quite that aggressively. Initially, it follows a more traditional model, requiring users to deposit assets worth at least 150% of the DYAD they're minting. However, here's where DYAD sets itself apart: they've tokenized the excess collateral in the system. Users holding this token can leverage its value as part of their backing, essentially putting that extra collateral to work.

This innovative combination allows DYAD to achieve something that's been elusive in the stablecoin world - it manages to be capital efficient, stable, and decentralized all at once. It's a significant step forward, potentially solving the stablecoin trilemma that has long challenged developers and other stablecoin projects.

In essence, DYAD isn't just iterating on existing stablecoin models - it's potentially redefining how we think about decentralized stablecoins altogether.

The DYAD Ecosystem: Notes, Vaults, and Kerosene

Let's break down the key components that make DYAD function.

At the core of the system, they have these unique NFTs called "Notes."

Think of them as your all-access pass to the DYAD world - you need one to play. These Notes are your ticket to depositing collateral, minting DYAD, and earning yield.

Notes are minted on a bonding curve. They started at 0.1 ETH and each new mint bumps the price up by 0.001 ETH. It's like a VIP list that gets more exclusive (and pricey) as more people join. This clever setup allows DYAD to keep tabs on user activity through metadata, which opens up some cool features like transferring positions and streamlining liquidations.

Now, let's talk about where your collateral actually goes. When you drop your collateral in to a vault, you get share-tokens back. It's like getting a receipt for your deposit, but this receipt has some serious perks. These vaults are flexible too - they can potentially hold any ERC-20 token, as long as governance approves.

The share tokens can be passed around without needing KYC, which could be a game-changer for bringing more traditional assets into the DeFi space.

Last but definitely not least, is Kerosene. This isn't just another utility token - it's the secret sauce that makes DYAD shine.

Kerosene lets users mint DYAD against the surplus collateral in the system. Which means you could potentially mint DYAD with a collateral ratio as low as 100%. That's like getting a dollar-for-dollar deal, which is pretty rare in the stablecoin world.

But Kerosene isn't just about minting more DYAD. It also acts like a shield, protecting you from liquidation. Its value isn't left up to the whims of the market. Instead, the protocol sets it based on the total collateral value and DYAD supply in the system.

So there you have it - Notes, Vaults, and Kerosene. These three components work together to create a stablecoin system that's pushing the boundaries of what we thought was possible in DeFi.

Dyad's Key Features and Mechanisms

Now, let's dive into the nuts and bolts of how DYAD keeps things running smoothly.

They've got a few tricks up their sleeve to ensure stability and efficiency, and trust us, they're pretty clever.

First up, liquidations. Think of this as DYAD's safety net. If a user's collateral value dips below 150% of their minted DYAD, it's liquidation time.

Any note holder can pull the trigger on a liquidation. And if you're the one doing the liquidating? You get a 10% bonus on the collateral.

With the rollout of DYAD V2, they've introduced partial liquidations. Instead of an all-or-nothing approach, users now have more wiggle room to manage their positions.

Next up, we've got redemptions. This is where you can burn your DYAD and get your collateral back. It's all handled through those Notes we talked about earlier. Now, here's where it gets interesting - this process opens up some juicy arbitrage opportunities for Note holders. It's like a built-in balancing act that helps keep the whole ecosystem stable.

Last but not least, let's talk about the XP system, a non-transferrable token that's tied to your Note. The more Kerosene you deposit, the more XP you earn. And here's the cool part - your XP gives you a boost in the DYAD ecosystem, cranking up your yield.

DYAD's managed to incentivize long-term commitment without resorting to hard locks. It's like they've cracked the code on getting users to stick around without feeling trapped.

So there you have it - liquidations, redemptions, and the XP system. These three mechanisms work together like a well-oiled machine, keeping DYAD stable, efficient, and user-friendly.

Dyad's Tokenomics and Kerosene Utility

Kerosene is the rocket fuel that powers the DYAD ecosystem and it has some interesting tokenomics.

They've set a hard cap of 1 billion Kerosene tokens. The lion's share of Kerosene - 58% - is earmarked for liquidity incentives. That's more than half dedicated to keeping the DYAD ecosystem liquid and thriving. The rest is divvied up between initial distribution events, team incentives, and a reserve for the ecosystem.

Kerosene really stands out from your run-of-the-mill utility token as its value isn't left to the whims of the market. Instead, the protocol itself sets Kerosene's value using a formula that takes into account the total value of exogenous collateral (that's your ETH and other non-DYAD assets), the supply of DYAD stablecoins, and the total supply of Kerosene tokens.

Kerosene's value is directly tied to the health and growth of the DYAD ecosystem.

The interplay between Notes and Kerosene creates the flywheel. Here's how it works: As users accumulate and deposit more Kerosene, they can mint DYAD more efficiently, reducing their need for exogenous collateral. This drives up competition for the surplus collateral in the system, which in turn fuels the ecosystem's growth.

It's a self-reinforcing cycle. The more people use Kerosene, the more valuable it becomes, which attracts more users, and the Flywheel goes round and round. This clever design turns Kerosene into more than just a token - it's the engine that keeps the whole DYAD machine running smoothly.

The Future of DYAD and Its Impact on DeFi

Alright, let's zoom out and look at the big picture.

Remember the stablecoin trilemma we talked about earlier? The one where you had to choose between stability, decentralization, and capital efficiency?

Well, DYAD's taken that trilemma and turned it on its head. They're serving up a stablecoin that's aiming to be the whole package - stable, decentralized, and capital efficient.

We're just at the beginning too. Dyad was launched just a few months ago and it's slowly been capturing TVL. It recently crossed 2k ETH ($5m) total deposits a week ago.

Kerosene is also seeing some growth, with prices tripling in the last two weeks, to .07, giving the project an FDV of $71m.

Circulating supply is less than 10% right now, and yields are above 80% on Merkle for the DYAD/USDC LP.

If you want to get in early to a protocol, Dyad is the place to be right now. Take a loan, farm Kerosene. Go check it out today.

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