A Guide to dForce – A Chinese DeFi Aggregator in Full Expansion

Project Reviews / 25.10.2020

dForce Network is China’s ambitious project to take over DeFi by aggregating financial protocols from all over the world. The Beijing-based platform is now stepping out of the shadow of more popular platforms like Compound and Maker to become more than just a crypto-related aggregator.

dForce wants to integrate every blockchain-based application known to man and become the world’s most-used DeFi service.

Before becoming the all-including, interdependent protocol ecosystem, dForce is busy recovering its credibility after an infamous hack attack in early 2020. With more than $86 million locked in value protocols and the plan to build on Binance’s new Smart Chain, things look bright for the network. The question is if dForce has what it takes to go all the way. Let’s find out!

What is dForce?

According to the dForce Network website, this project wants to “reinvent money” and “reinvent finance.” At first, it looks and sounds like every DeFi protocol riding on the overnight success of decentralized finance. However, the platform appears to be much more than that once you take a look under its hood.

dForce Network is an interoperable aggregator platform for DeFi protocols. Its goal is to facilitate the execution of a wide range of decentralized finance operations, including transaction services, community governance, and instant stablecoin swapping.

As part of the new wave of decentralized finance protocols, dForce Network looks to build a powerful presence in the industry and integrate all the DeFi applications in China. In the long-term, the platform aims to become a far-reaching DeFi super-network by assimilating other networks and platforms worldwide.

For now, dForce is growing steadily, thanks mostly to the $1.5 million funding that the project received from the Austin Texas-based crypto venture fund Multicoin Capital in April 2020.

Some of the best features of dForce include:

  • Support for staking pools
  • A DeFi lending dApp, called Lendf.Me
  • A meta-stablecoin in the form of USDx
  • A trading platform for instant stablecoin swaps, called dForce Swap

At the time of this writing, dForce Swap supports the following tokens: USDx, HUSD, BUSD, USDT, DAI, USDC, PAX, and TUSD. Peckshield has most recently audited the dForce protocol in May 2020.

A Brief History of dForce Network

dForce was launched in 2019 in China. Its whitepaper was made public simultaneously, but it has gone through several revisions since, with the last one dating from July 2020.

The project is backed by a small team of developers and has very few public figures to represent it in the media. One of them is its co-founder Mindao Yang, who has a staunch belief that “Aggregation as a Service sucks as a value capture, but if it’s an asset protocol, it’s a super sticky supernova.”

Shortly after its release, in January 2020, Compound accused dForce of plagiarizing its codebase. The allegations were proven by the remnants of Compound’s code in dForce’s GitHub codebase. To make amends for getting caught red-handed, dForce added Compound’s attribution on its website and GitHub page.

Despite being less than 2-years old, dForce has seen its reputation tarnished even more by a hack attack in April 2020. Shortly after announcing the funding received from Multicoin Capital, the platform was hit by one or more attackers.

The hackers used imBTC (an ERC-777 “wrapped” version of Bitcoin) to expose the vulnerability of the Lendf.me protocol, which they repeatedly attacked before leaving with more than $25 million worth of Ether (ETH), tokenized Bitcoin, and other tokens.

In the aftermath of the attack, dForce refunded all its users, and the hackers eventually returned the stolen funds. The attackers chose this surprising solution for fear of being exposed after using Uniswap to exchange the hacked tokens for imBTC on the same day of the attack.

Since that incident, dForce did not make the news highlights, but it continues to grow steadily with the emerging DeFi sector.

What is the DF token?

DF is the native utility token of the dForce network. It works on the platform both as a means of incentivization and as a validator for deposits. Additionally, it provides governance powers to its holders.

dForce uses its native DF token to bind together several protocols in terms of assets and liquidity. Token holders can easily engage in financial operations that pass through numerous financial protocols and gain rewards without changing platforms or tokens.

The DF token was built on top of the Ethereum platform and launched in July 2019. A total of 1 billion tokens were minted and distributed as follows:

  • 20% for investors, advisors, and early backers
  • 20% for the team
  • 25% for Gravity Pool
  • 10% for Ecosystem
  • 25% for the Foundation

At the time of this writing, DF has a market capitalization of $9,404,526. There are over 83,053,500 units in circulation, and one DF token is available for $0.113.

You can find DF available on crypto exchanges like Huobi, MXC, and Coinbene. Because it was built on the Ethereum blockchain, DF is easy to store in ERC-20 compatible crypto wallets like Ledger Nano S and Trezor.

How dForce works?

dForce follows in the footsteps of other DeFi aggregators like Maker and Compound. However, it wants to do things differently by providing a platform that would integrate all blockchain-based DeFi applications and monetary protocols across the board.

To reach its goals, dForce has created a dual-token model. The first step in this direction was the release of USDx, which is the first synthetic indexed USD stablecoin protocol developed by the network.

USDx is an ERC-20 token that is 1:1 pegged to a basket of selected stablecoins. This basket is mostly packed with fiat-pegged tokens that have high levels of transparency and liquidity. dForce binds USDx through smart contracts. Some of the tokens available in the basket include USDC, TUSD, and PAX, and their presence there is adjustable via on-chain governance.

The co-founder of dForce, Mindao Yang, refers to USDx as a unique asset, which ”unlike other synthetic assets that primarily rely on price references without any underlying assets, our synthetic stablecoin is 100% collateralized with constituent stablecoins.”

The other token on the dForce platform, the DF gives users to leverage in transactions and governance and works as part of the incentive mechanism. The developers also want DF to function as a last resort solution for the entire dForce ecosystem. If, at one point, USDx would require recapitalization, the network would mint enough DF tokens to cover it.

Yield farming is a straightforward solution for making a profit from asset storage. However, dForce developers believe that many people can’t get their heads around it. So, the network aims to make it even easier by letting the DF protocol do the work for them.

Here is where dForce departs from the Compound model on which it based its code. On Compound, users exchange their assets for COMP, which they later sell. On the dForce network, crypto holders do not have to engage in transactions. Instead, the protocol uses an internal buffer pool to exchange the tokens back into the original stablecoin yield.

Users can deposit USDx or USDT and, in return, get dUSDx or dUSDT, respectively. Next, the protocol can stake these tokens in any pool on the network to generate yield.

This dual-token system enables dForce to avoid running a regulated, centralized stablecoin platform. If the regulators took out one coin from their basket, they would replace it with another fiat-pegged asset.

The benefits of using dForce include access to a diverse offer of digital assets and increased protection for users through a multilayer system of risk buffers.

The Bottom Line – A Guide to dForce

dForce plans to outrun and possibly outlive Compound and Maker in the future. While that day seems way past the horizon line at the moment, the Beijing-based network is making decisive steps towards it.

By pooling yields across the DeFi money-lego stacks, dForce provides users with unlimited access to the yield power of all the DeFi protocols out there. They get to swap, deposit, and exchange all types of tokens, including the governance ones. The only condition for having this great power is never to leave the network.

It all looks great on paper. However, dForce still has to prove its resistance to hack attacks in the long run. The recent security audit from Peckshield is a good start to build on in the coming months.

The dForce Network has huge potential, and only time will tell if it can reinvent finance, money and offer borderless access to financial tools.

A creative writer in the field of content writing for the past 7 years. Iulian is passionate about his work and his interest in areas such as technology, travel, sports, literature and gastronomy have aided him to the research quality in articles that reflect these themes. Recently, he discovered the Bitcoin and the blockchain technology and he’s a big fan now.