Introducing dTRINITY—The First Subsidized Stablecoin Protocol in DeFi

SINGAPORE (June 21, 2024) — We are thrilled to announce the development of dTRINITY, a next-generation lending protocol that offers yield-backed subsidies to stablecoin borrowers—the first of its kind in DeFi. By reducing borrowing rates with renewable interest subsidies, dTRINITY significantly boosts credit demand and supply utilization, leading to an elevated equilibrium that creates higher yield for lenders.

dTRINITY will initially focus on stablecoin lenders and LPs who prioritize liquidity and capital preservation as well as yield loopers who seek to amplify their strategies with leverage. Ultimately, our mission is to revolutionize the $30-billion DeFi lending market by delivering superior credit infrastructure and stablecoin rates that are sustainable and scalable.

The project has been in development since Q1 ‘24 and will officially go live in Q4 on Fraxtal, with follow-on expansions to Ethereum and other chains starting in 2025.

dTRINITY is developed by Trinity Foundation Ltd., a Singaporean non-profit public company limited by guarantee. Core project contributors include the founders of Stably, with notable backers from leading DeFi projects such as the founders of Frax, Sky, and Convex.

What is yield looping?

Yield “looping,” or leveraging, is a process where a DeFi user repeatedly supplies a yield-bearing asset (e.g., sUSDe) as collateral to a lending protocol and borrows stablecoins against it. The borrowed stablecoins are then used to acquire more of the collateral asset, effectively increasing exposure to it with leverage. This strategy is profitable if the yield generated by the leveraged collateral exceeds the stablecoin loans’s borrowing cost. However, there are also risksinvolved with yield looping.

How does dTRINITY enhance stablecoin yields?

dTRINITY — inspired by Frax’s DeFi Trinity framework—delivers superior rates through the vertical integration of its full-reserve stablecoin (dUSD), subsidized lending protocol (dLEND), and external DEX partners (e.g., Curve). This “trinity” of DeFi primitives forms the foundational architecture of dTRINITY — combining currency, credit, and liquidity into an elegant flywheel, with the new addition of interest subsidies.

Loopers can supply yield-bearing collateral into dLEND to take out dUSD loans. The Borrow APY for dUSD is constantly subsidized by its reserve earnings, enabling users to loop more capital-efficiently and earn higher leveraged yield. The borrowed dUSD can be swapped for other assets through Curve, which also serves as a collateral liquidation venue for dLEND positions.

Thanks to subsidized credit demand from borrowers/loopers, dUSD’s supply utilization on dLEND can be sustained at a higher than average level vs. unsubsidized stablecoins on other lending protocols. This, in turn, boosts the Supply APY for dUSD on dLEND, attracting more lenders to the ecosystem.

Subsidized credit expansion also leads to an increase in velocity of dUSD on Curve, generating more trading volume and pool fees for dUSD LPs who also earn CRV emissions .

What is dUSD?

dTRINITY USD (dUSD) is a decentralized US Dollar-pegged stablecoin fully backed by an exogenous on-chain reserve. Every dUSD is backed by at least 1 USD worth of collateral, consisting of price-stable and yield-bearing assets like USDC, USDT, FRAX, DAI, sFRAX, and sDAI. The reserve’s yield is then used to fund ongoing interest subsidies (rebates) for dUSD borrowers on dLEND, lowering their effective Borrow APY while raising the Supply APY for dUSD lenders.

Users can mint or redeem dUSD permissionlessly and atomically. There is no minting fee. Redemption may have a small fee.

In addition to open minting and redemption, dTRINITY optimizes price stability and liquidity for dUSD on DEXs through Stability Market Operations (SMO) and Algorithmic Market Operations (AMO). SMOs repuchase dUSD at a discount from the market using underlying reserves, typically when borrowers increase leverage. Conversely, AMOs create and sell new dUSD into the market when it’s trading at a premium, typically when borrowers deleverage. These SMO and AMO mechanisms allow dTRINITY to stabilize its stablecoins during credit expansion and contraction cycles while capturing arbitrage profits to over-collateralize underlying reserves, further strengthening stability over time.

What is Fraxtal?

dTRINITY will be deployed on Fraxtalas its genesis network. Created by the Frax team, Fraxtal is the first modular rollup Ethereum L2 with a native blockspace reward mechanism called Flox. This means that not only will users earn incentives on the Fraxtal network, smart contracts on Fraxtal like dTRINITY will also accrue incentives which could be redistributed to users as additional rewards later on, further enhancing their benefits.

Points Program & Roadmap

Upon mainnet launch in Q4 ‘24, dUSD lenders and LPs will earn dTRINITY Points (dT Points) for contributing liquidity to the protocol. Accumulated points will be converted to dTRINITY’s governance token (TRIN) in the future at the TGE in 2025. More details about the points program and the TRIN token will be revealed over time.

Fraxtal testnet access for dTRINITY will be available publicly by the end of July 2024. Our documentation is available herewhere you can find our roadmap. Follow us on X as well and stay tuned for more updates!

---

📢 Join the dTRINITY community to get the latest updates!

Website | X (Twitter) | Documentation | Discord | Blog | Other links

Disclaimer: dTRINITY is not available to residents of Canada, Iran, North Korea, Russia, the USA, the UK, and other restricted regions.

The information contained herein should not be considered legal, business, financial, or tax advice. Past performance is not indicative of future results. Digital assets and DeFi protocols carry significant risks, including the potential for complete loss of funds. By using dTRINITY, you acknowledge and accept these inherent risks. View our full Disclaimer and Terms to learn more.