- dTokens, or decentralized assets, are a new form of crypto investment on the DeFiChain blockchain.
- dTokens can be minted by anyone via taking out a decentralized loan, collateralized by crypto.
- Holding dTokens does not mean you hold or own the underlying asset.
- You can buy and sell dTokens on DeFiChain DEX, put them into liquidity mining or participate in arbitrage trading.
Tokens in crypto are nothing new, but what if you could have greater access across different financial asset types like stocks, ETFs and even commodities? DeFiChain’s newly launched decentralized assets may be your answer.
Decentralized assets, or dTokens, are an entirely new form of crypto investment. Unlike traditional assets which are issued by companies, dTokens can be minted by anyone on the DeFiChain blockchain and traded freely. Note that holding dTokens does not mean you hold or own the underlying asset.
Using Tesla stock (TSLA) as an example, a Tesla dToken would utilise the same ticker symbol TSLA. However, because dTokens are minted on the DeFiChain blockchain, the decentralized token for TSLA would be named dTSLA on the blockchain. Again, holding dTSLA does not mean you hold TSLA stock.
dTokens do not track the price of the underlying asset. Their prices after minting are determined solely by supply and demand on the DeFiChain blockchain. This launch has made possible new use cases for dTokens like asset creation, arbitrage trading and liquidity mining.
Currently, the dTokens available are mostly decentralized crypto, stock and ETF tokens. The full list of available dTokens can be viewed here.
How do you obtain dTokens?
There are two ways to get dTokens. You would need a DeFiChain wallet for both options.
1. You could buy dTokens directly on DeFiChain DEX.
2. You could mint dTokens via decentralized loans, collateralized by crypto.
To mint, you would have to lock up some DFI (DeFiChain’s native token) as collateral, in a vault on the blockchain. There is an option to add up to 50% of the collateral using a second token.
Price oracles, which aggregate and track a number of variable factors, determine how much dTokens you can mint in exchange for the amount of collateral in your vault. This minting price would be close to the real world price of the actual asset. Once the dToken is created, its price is no longer determined by price oracles but by demand and supply on DeFiChain DEX.
How do you earn with dTokens?
Hold to Invest
A simple way to earn would be to actively trade dTokens on the DeFiChain DEX. You can earn on price differences.
You can also earn returns from dTokens in liquidity mining, available on DeFiChain DEX.
Screenshot of liquidity pools on DeFiChain website (Refer to DeFiChain website for the latest APR rates)
Do note that dToken liquidity pools are powered by DUSD as a second coin pair. DUSD is a dToken and stablecoin tied to the value of the US Dollar. This means that if you want to put dTSLA into a liquidity pool, you would need to have DUSD as well.
One main risk of liquidity mining is impermanent loss. In liquidity mining, a pool with an equal value of two tokens is created. When people trade much more on one side of the pool versus the other, you can end up with an imbalanced pool and the price of your deposited assets changes as compared to when you first deposited them.
Losses are likely to be equalized with DeFiChain’s high annual percentage rates (APRs) currently. However, you should know that APR rates are dynamic and can fluctuate. Always do your due diligence and confirm the rates before allocating your funds to the pools.
Because dTokens launched only recently, there are many arbitrage opportunities as token prices depend heavily on demand and supply. Prices of tokens become cheaper or more expensive as liquidity gets swapped on DeFiChain DEX, allowing you to mint or buy low on DeFiChain and sell high on a centralized exchange, and vice versa.
You could also arbitrage the liquidity pools on DeFiChain. With DUSD in high demand now, you could mint DUSD and sell it to get more DFI and USDC, which you can then lock as new collateral in the vault to mint more dTokens. While DUSD is a stablecoin, it is newly launched and thus trading around $1.30 at this time. DUSD will need a couple of weeks before it is arbitraged out and trends towards $1.
dTokens are definitely something to explore if you are looking for something different. However, dTokens are currently only minted on DeFiChain and circulated within the DeFiChain ecosystem. Cross-chains are not supported at this time. You should closely follow DeFiChain’s development and news if you intend to jump on the dTokens hype.
Decentralized Assets FAQ
A guide to creating dTokens
Arbitrage trading on DeFiChain DEX
The views expressed in this article are the author's alone and do not necessarily represent the views of ApolloX.
Risk Reminder: Crypto trading carries a risk. All trading activities are done at your discretion and at your own risk. The information here should not be regarded as financial or investment advice from ApolloX. ApolloX will not be liable for any loss that might arise from your use of any financial product.
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