On May 9, 2021, Duet Protocol announced the closure of $3 million in its first round of investment.
Duet identifies itself as the world’s first multi-chain synthetic asset protocol with a hybrid mechanism of over-collateralization and algorithm stabilization.
The first-round investment was led by OmniLAB, DraperDragon, Everest Ventures Group, One Block Capital, Moonwhale Ventures, Dutch Crypto Investors, LD Capital, Zonff Partners, Cabin VC, ArkStream Capital, as well as the co-founder of Bit Digital and partners of A&T Capital.
OmniLAB is the investment fund that backed the world’s first stablecoin (on OmniLayer) circulation specification for Lightning Network. The DraperDragon Innovation Fund is a core member of Draper Venture Network and mainly focuses on investing in United States–China cross-border startups.
The second round of investment and regional partners around the globe will be announced by Duet in the coming days.
Synthetic assets paradigm path selection
The crypto market is a high-speed self-evolving dynamic ecosystem in which decentralized finance is pioneering massive adoption and mechanism innovation. “Duet is bridging the gap between real-world assets and crypto markets, and we are convinced that synthetic assets are the optimal approach to connect these two worlds,” said J.Bach, the pseudonymous co-founder of Duet Protocol.
Duet synthetic assets are targeting the stock market. Compared with the current alternatives, Duet claims to deliver a unique design to optimize minting and trading.
- Openness and user-friendly: Compared to Binance or FTX equity methods, on-chain synthetic assets minting on Duet is easier and friendlier for investors, having no entry barriers, procedures cost or single spot risk.
- Multiple collateral positions: Synthetix and Linear protocols adopt the single asset deposit with sharing debt method, whereas Duet chooses multiple collaterals with separated CDPs, which reduces minters’ risk and raises scalability.
- Assets diversity and compatibility: Compared with MakerDAO’s Dai, Duet accepts various types of synthetic assets, embraces wider ecosystems, and supports Ethereum, Binance Smart Chain and other EVM-compatible blockchains.
- Compatibility: Duet provides transferable dAssets that could be leveraged in other DeFi protocols, compared with the perpetual-ish protocol that only supports long or short positions.
Improvement and innovation go hand in hand
Currently, the development of synthetic assets still faces challenges, such as promoting minting incentives, increasing asset liquidity and optimizing capital efficiency. Duet bonds the improved existing mechanism and innovative paradigm. Duet initiates the dual synthetic minting methodology: over-collateralization + algorithmic pegging, which simultaneously supports users to over-collateralize their deposit to mint assets and instant minting channel.
First, Duet reforms the over-collateral mechanism. Balancing capital efficiency and CDP safety is the priority to consider. Duet acts as the coordinator of collateral ratio in this method. For users, dual-stake collateral and Duet, they get a CDP defender and an adjustable liquidation limit.
Second, Duet supports algorithm pegging asset minter: Burning the Duet token and direct minting of synthetic dAssets empower a seamless and zero-spread asset minting and trading process while providing stablecoin dUSD and leverage trading via minting XL/XS dAssets.
Besides minter modules, Duet also brings other improvements:
- A wide range of assets acceptance: Support mainstream native assets, interest-bearing assets, cross-chain assets, and security tokens act as collateral, enabling Duet to absorb major crypto market share.
- Optimized capital efficiency: Collateral ratio adjustment, leverage trading, principle assets yield enhancement, etc., are designed to raise users’ capital efficiency and create more use cases for the Duet token.
Ultimate empowerment by Duet
Duet plays an essential role in every Duet module, combining four major functions: minting, adjustment, earning and governance.
- Algorithm-pegged dAsset value vehicle: Duet is burned to mint the equivalent dAsset, which acts as an asset channel and value vehicle.
- Capital utilization conditioner: In over-collateralization, Duet deposits adjust the CDP liquidation limit, leading to better capital efficiency and safer collateral position.
- Interest-earning capture: System fee, collateral yield earning buy-back and other various use cases backs Duet’s value.
- Governance: The Duet protocol will be an open, community-led DAO. Proposals can be put forward for system parameter design, acceptance and removal of collateral assets, which will be determined by voting.
Establishing a financial world governed by a DAO
The vision of Duet Protocol is to build an on-chain parallel space with global partners and contributors governed by a decentralized autonomous organization that enables the on-off ramp of flat assets (traditional assets) and sharp assets (crypto assets).
According to Bach:
“Duet’s innovative dual synthesis model can greatly improve the capital efficiency of users’ funds. With Duet, global investors would be able to create and allocate capital to any assets with only one digital wallet in a frictionless and user-friendly manner.”
Get the latest updates on Duet on its social media channels:
White paper: https://duet.finance/doc/Duet-Protocol-White-Paper.pdf