Market Cycles
The dTRINITY economy is driven by natural credit expansion and contraction cycles of dUSD. In expansionary phases, increased leverage and velocity boost credit supply but dilute borrower subsidies, raising effective borrowing and lending rates. During contractions, deleveraging activity replenishes reserves and subsidies, lowering effective rates while preparing the system for its next expansionary phase.
Even as float revenue declines during low-yield and/or contractionary periods, reduced subsidies still deliver materially better outcomes vs. no subsidies. The resulting increase in borrower participation and utilization unlocks a higher long-run equilibrium for dUSD, where lenders earn above-market yields while borrowers maintain competitive borrowing costs across market cycles.
Peg Stability
dUSD is soft-pegged to $1 in the secondary market, supported by arbitrageurs who rely on permissionless, atomic minting and redemption to directly access 1:1 reserve convertibility.
During credit expansion cycles, selling pressure from borrowers may cause dUSD to trade below $1, as liquidity pools accumulate more dUSD relative to other paired assets. Market makers are then naturally incentivized to buy dUSD at a discount, redeem it at par, and capture arbitrage profits. This process restores price stability but also decreases reserves at the same time.
Conversely, during credit contraction cycles, borrowers mint or buy back dUSD to repay debt, causing dUSD to trade closer to $1 as liquidity pools rebalance. If buying pressure from borrowers causes dUSD to trade above $1, market makers are naturally incentivized to mint dUSD at par, sell it at a premium, and capture arbitrage profits. This process maintains price stability and re-expands underlying reserves.
Bull Market → Credit Expansion → Rising Rates
- Leverage Demand: Rising asset prices and low dUSD borrowing costs increase monetary leverage, driving lending deposits and debt higher, expanding the total money supply of dUSD.
- Increased Utilization: Growing debt pushes up utilization, tightening system-wide credit.
- Increased Velocity: Borrowers and arbitrageurs increase credit velocity and money velocity of dUSD across the entire market.
- Yields Rise: Higher utilization and velocity increase yields for lenders and LPs of dUSD.
- Credit Expansion: Higher yields attract more capital into the system, increasing reserves, circulating supply, and lending deposits, further expanding the total money supply of dUSD.
- Reserve Contraction: Debt expansion and arbitrage activity raise the redemption rate of dUSD, reducing reserves and circulating supply at the same time.
- Subsidy Dilution: A higher debt-to-reserve ratio and lower float revenue reduce rebates per unit of debt, compressing dUSD borrower subsidies.
- Borrowing Costs Rise: Lower rebates raise dUSD net borrowing rates.
Bear Market → Credit Contraction → Falling Rates
- Deleverage Demand: Falling asset prices and high dUSD borrowing costs reduce monetary leverage, driving lending deposits and debt lower, contracting the total money supply of dUSD.
- Decreased Utilization: Debt unwinds pull down utilization, loosening system-wide credit.
- Decreased Velocity: Lower debt and reduced activity decrease credit velocity and money velocity of dUSD across the entire market.
- Yields Fall: Lower utilization and velocity reduce yields for lenders and LPs of dUSD.
- Credit Contraction: Lower yields lead to capital outflows from the system, decreasing reserves, circulating supply, and lending deposits, further contracting the total money supply of dUSD.
- Reserve Expansion: Debt repayments and arbitrage activity lower the redemption rate of dUSD, re-expanding reserves and circulating supply at the same time.
- Subsidy Regeneration: A lower debt-to-reserve ratio and higher float revenue increase rebates per unit of debt, boosting dUSD borrower subsidies.
- Borrowing Costs Fall: Higher rebates reduce dUSD net borrowing rates.
- Repeat from Step 1 ☯️
In addition to reserve float revenue, dTRINITY may allocate other sources of revenue and growth budgets toward user incentives, subject to protocol governance.
Key Metrics
The metrics below are key performance indicators of the dTRINITY economy. They provide a unified framework for understanding how value flows through the system—from base reserves and stablecoin issuance to credit expansion, market activity, and protocol revenue.
Monetary Metrics
Description | Significance | |
Reserve TVL
(M0 Money Supply) | Exogenous collateral backing of dUSD, including other stablecoins, yieldcoins, and Curve LP positions | Total monetary base of dUSD, serving as final settlement money for redemptions while anchoring price stability to the underlying base reserves; analogous to the M0 money supply in TradFi
Note: Unlike M0 in TradFi, M0 for stablecoins is backed by exogenous reserves and cannot be endogenously created like fiat, making it a full-reserve monetary base |
Circulating Supply
(M1 Money Supply) | Total Mints - Total Redeems | Total supply of dUSD tokens in circulation, fully backed by base reserves. This represents the narrow money supply, i.e., spendable/transferable dUSD used for transactions and liquidity across the entire market; analogous to M1 in TradFi
Note: M1 and M0 for stablecoins are separate, convertible but non-fungible layers, unlike fiat where M0 and M1 are the same instrument |
M2 Money Supply | M1 + Aggregate Debt | dUSD broad money supply, i.e., narrow money + credit expansion through lending activity; analogous to M2 in TradFi.
Note: Unlike M2 in TradFi which is created via fractional reserve banking, M2 for stablecoins is constrained by base reserves and market liquidity, making it a full-reserve credit system |
Redemption Rate | Total Redeems / Total Mints | Average rate of demand for dUSD base reserves |
Money Velocity | Total Daily Transfers / M1 | Transactional velocity of dUSD across the entire market where tokens transfer between wallets or accounts (on/offchain), including P2P transfers, swaps/trades, staking, lending, borrowing, etc. |
Reserve Ratio | M0 / M1 | Also known as the “Collateral Ratio,” or the current level of collateralization for dUSD, which should be at least 100% |
Money Multiplier Ratio | M2 / M0 | dUSD credit amplification factor of the monetary base; analogous to the money multiplier ratio in TradFi |
Monetary Leverage Ratio | Aggregate Debt / M2 | Share of the total dUSD money supply actively deployed as credit across the entire market |
Debt-to-Reserve Ratio
(Debt Ratio) | Aggregate Debt / M0 | dUSD debt expansion relative to its monetary base. This ratio helps determine how much float revenue can be distributed as borrower rebates per unit of debt |
Lending-to-Reserve Ratio
(Lending Ratio) | Aggregate Lending TVL / M0 | dUSD credit supply relative to its monetary base. This ratio helps determine how much float revenue can be distributed as lender rewards per unit of TVL
Note: dTRINITY rebates borrowers by default. Some float revenue may be shared with lenders as rewards, depending on market conditions |
Market Liquidity-to-Reserve Ratio
(Market Liquidity Ratio) | Aggregate Liquidity TVL / M0 | dUSD + sdUSD secondary market liquidity relative to the monetary base. This ratio helps determine how much float revenue can be distributed as LP rewards per unit of TVL
Note: Some float revenue may also be shared with LPs as rewards, depending on market conditions |
Float APY | Float Revenue / M0 | Exogenous yield (float revenue) generated from productive M0 reserves. Float revenue provides the core source of funding for dUSD user incentives |
Borrower Rebate APY | (Float APY / Debt Ratio) × Weight | Variable interest rebate rate for dUSD borrowers across the entire market, reducing their net cost per unit of debt |
Lender Reward APY | (Float APY / Lending Ratio) × Weight | Variable supply reward rate for dUSD lenders across the entire market, enhancing their net yield per unit of TVL |
LP Reward APY | (Float APY / Market Liquidity Ratio) × Weight | Variable supply reward rate for dUSD and sdUSD LPs across the entire market, enhancing their net yield per unit of TVL |
Liquidity Metrics
Description | Significance | |
Peg Stability | Average deviations from unit NAV (net asset value) for dUSD + sdUSD | Primary indicator of stability and credibility for dTRINITY. Peg stability is reinforced by open market operations and atomic redemptions of protocol-issued assets |
Aggregate Liquidity TVL | Total assets deposited into all integrated trading pairs and liquidity pools for dUSD + sdUSD | Measure of total liquidity depth for protocol-issued assets across the entire market
Note: dUSD + sdUSD pools are both included since cross-pool arbitrage activity mutually supports liquidity and peg stability for both assets |
Aggregate Liquidity Composition | Percentage of dUSD + sdUSD vs. other paired assets across all integrated trading pairs and liquidity pools | Deep liquidity from paired assets strengthen peg stability for protocol-issued assets, vice versa |
Aggregate Trading Volume | Total daily volume across all integrated trading pairs and liquidity pools for dUSD + sdUSD | A core component of money velocity for protocol-issued assets across the entire market |
Aggregate Liquidity Utilization | Aggregate Trading Volume / Aggregate Liquidity TVL | Measure of capital efficiency for liquidity pools of protocol-issued assets across the entire market |
Aggregate Base LP APY | Average LP earnings rate from trading fees + native yields via paired assets across all integrated trading pairs and liquidity pools for dUSD + sdUSD | Variable baseline yield for LPs of protocol-issued assets across the entire market (before rewards) |
Aggregate Net LP APY | Aggregate Base LP APY + LP Reward APY | Effective average yield for LPs of protocol-issued assets across the entire market (net of rewards)
Note: Rewards may be distributed directly to LPs or processed through veTokenomic mechanisms (e.g., Curve’s veCRV), potentially improving reward efficiency and LP returns |
Credit Metrics
dLEND Markets Only
Description | Significance | |
Vault TVL | Total assets in native lending vaults (sdUSD) and looping vaults (dLOOP). These vaults are also powered by dLEND | dTRINITY’s ERC-4626 strategy vaults mint redeemable receipt tokens that enable composability and secondary market liquidity potential for dLEND deposits |
Lending TVL | dUSD supplied by lenders and vaults into dLEND | Total dUSD credit supply within the dTRINITY protocol, enabling endogenous debt expansion |
Debt | Active dUSD loans in dLEND | Total dUSD debt within the dTRINITY protocol; cannot be greater than Lending TVL |
Collateral TVL | Collateral supplied by borrowers into dLEND | Total collateral securing dUSD debt within the dTRINITY protocol (separate from dUSD base reserves)
Note: dUSD is disabled as collateral in dLEND to prevent subsidy arbitrage by loopers |
Credit Utilization | Debt / Lending TVL | dUSD credit utilization level within the dTRINITY protocol |
LTV Ratio
(Loan-to-Value) | Debt / Collateral TVL | Primary indicator of average health and credit risk for dUSD loans within the dTRINITY protocol |
Leverage Ratio | Debt / (Collateral TVL - Debt) | Average level of leverage taken on by dUSD borrowers within the dTRINITY protocol |
Credit Velocity | (Total Borrows + Total Repayments) / Average Debt | Average turnover rate of dUSD credit within the dTRINITY protocol |
Gross Borrow APY | dUSD borrowing rate determined by dLEND’s dynamic interest rate model and utilization | Variable raw borrowing cost for dUSD in dLEND (before rebates); cannot be less than Base Supply APY |
Net Borrow APY | Gross Borrow APY - Borrower Rebate APY | Effective borrowing cost for dUSD in dLEND (net of rebates); may be less than Base Supply APY |
Base Supply APY | dUSD lending rate determined by dLEND’s dynamic interest rate model and utilization | Variable raw lending yield for dUSD in dLEND (before rewards); cannot be greater than Gross Borrow APY |
Net Supply APY | Base Supply APY + Reward APY | Effective lending yield for dUSD in dLEND (net of rewards); may be greater than Gross Borrow APY |
All Lending Markets
Description | Significance | |
Aggregate Lending TVL | dLEND Lending TVL + dUSD deposits in all externally integrated lending markets (e.g., Morpho) | Total dUSD credit supply across the entire market |
Aggregate Debt | dLEND Debt + all external lending markets | Total dUSD debt across the entire market; cannot be greater than Aggregate Lending TVL |
Aggregate Collateral TVL | dLEND Collateral TVL + collateral deposits in all externally integrated dUSD lending markets | Total collateral securing dUSD debt across the entire market (separate from dUSD base reserves)
Note: dUSD is disabled as collateral across all integrated lending markets to prevent subsidy arbitrage by loopers |
Aggregate Credit Utilization | Aggregate Debt / Aggregate Lending TVL | Average dUSD credit utilization level across the entire market |
Aggregate LTV Ratio | Aggregate Debt / Aggregate Collateral TVL | Primary indicator of average health and credit risk for dUSD loans across the entire market |
Aggregate Leverage Ratio | Aggregate Debt / (Aggregate Collateral TVL - Aggregate Debt) | Average level of leverage taken on by dUSD borrowers across the entire market |
Aggregate Credit Velocity | (Total Borrows + Total Repayments) / Average Aggregate Debt | Average turnover rate of dUSD credit across the entire market |
Aggregate Gross Borrow APY | Average dUSD borrowing rate determined by different interest rate models and utilization levels across integrated lending markets | Raw average borrowing cost for dUSD across the entire market (before rebates); cannot be less than Aggregate Base Supply APY |
Aggregate Net Borrow APY | Aggregate Gross Borrow APY - Borrower Rebate APY | Effective average borrowing cost for dUSD across the entire market (net of rebates); may be less than Aggregate Base Supply APY |
Aggregate Base Supply APY | Average dUSD lending rate determined by different interest rate models and utilization levels across integrated lending markets | Raw average lending yield for dUSD across the entire market (before rewards); cannot be greater than Aggregate Gross Borrow APY |
Aggregate Net Supply APY | Aggregate Base Supply APY + Reward APY | Effective average lending yield for dUSD across the entire market (net of rewards); may be greater than Aggregate Gross Borrow APY |
Protocol Metrics
Description | Significance | |
Protocol TVL | Reserve TVL + Lending TVL + Collateral TVL + Vault TVL | Total value locked within the dTRINITY protocol |
Aggregate TVL | Reserve TVL + Vault TVL + Aggregate Lending TVL + Aggregate Collateral TVL + Aggregate Liquidity TVL + Others | Total value locked globally across all integrated markets for protocol-issued assets |
Total Users | Total holders + lenders + borrowers + vault depositors + LPs + other users of protocol-issued assets | Protocol adoption headcount across the entire market |
Average User TVL | Aggregate TVL / Total Users | Average capital deployed per user across the entire market |
Gross Revenue | Float revenue + dUSD fees + dLEND fees + vault fees + others | Total protocol revenue generated by dTRINITY across all sources |
Gross Margin on Reserves | Gross Revenue / Reserve TVL | dTRINITY’s gross revenue margin relative to base reserves |
Gross Margin on Protocol TVL | Gross Revenue / Protocol TVL | dTRINITY’s gross revenue margin relative to Protocol TVL |
Live analytics dashboard for the above metrics coming soon.