Distributive Debt Cycle | DDC

DDC - Distributive Debt Cycle - Tracks outstanding debt in both traditional and DeFi settings to determine overall liquidation risks broad market. This is a direct correlation between volume, margin, and total debt shifts aggregated over a trailing one month period.

If the correlation between the three converge, this signals a higher likelihood of increased volatility due to broad market overexposure. As such, the asset is structured to appreciate in value. The opposite is also true if the correlation between the three lessens, this signal as a lesser likelihood of increased volatility due to broad market underexposure. However, volatility is baked into the product, therefore it can have wider fluctuations based on said correlations as well as typical market swings. As such, it can act as a shorter to mid-term trading tool based on portfolio bias of the aforementioned.

Mints start at 10 USD worth of ISA and will theoretically trade as a summation of the aforementioned ratios. The higher the correlation, the more sensitive DDC is towards positive moves. The lower the correlation, the less sensitive the asset trades. Over time - the range will rise or fall based on the relationship between the two, but the bias representation will remain consistent.

Like all collateralized products on our platform, sRho is used to secure the short position. DDC utilizes a 1.5:1 collateral ratio to secure the position. A 2.5% mint fee is required to mint DDC - with the minter receiving sDDC in return as a receipt.

A 2.5% fee applies to swapping sDDC. sDDC can be bonded and sold to the Treasury. Short-sellers will also pay interest to the pooled long sDDC at a daily interest rate of 0.2% per day - which will be paid for in sRHO. This daily interest will be calculated at the time of establishing the short by entering the maximum number of days you will be short for. Once the time limit is up - the short contract will expire and the short closed. If DDC is below the price when the short was initiated, the aggregated long pool of DDC will pay the unit count worth of profit to the now closed short holder. The time interest the short paid to the collected pool of longs will then be distributed to the longs proportional to their positional unit count.

However, the interest will only be paid to the long holders that were in the pool at the time the short was established. If a short-seller chooses to close out their position at a loss, the collateral lost will be divided among all long sDDC unit holders that were in the pool at the time the short was established. If the short-seller closes out their position at a profit, the percentage of the profit will be divided amongst all long sDDC and the appropriate sDDC units will be transferred to the short-seller as profit.

Shorting above the total float of DDC in the lending pool is prohibited.

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