Decentralized Stablecoin (DSC)

A fully decentralized, exogenously collateralized stablecoin system pegged to the US Dollar.

Overview

DSC (Decentralized Stablecoin) is an algorithmic stablecoin designed to maintain a 1:1 peg with the US Dollar. It's:

• Exogenously Collateralized: Backed by assets outside the protocol (WETH, WBTC)
• Dollar Pegged: Maintains a target value of $1 USD
• Algorithmically Stable: Uses code-based mechanisms to maintain stability
• Overcollateralized: Always maintains collateral value greater than the minted stablecoin value

This system is similar to MakerDAO's DAI but with simpler mechanics: no governance, no fees, and only WETH and WBTC as collateral.

Smart Contracts

DSCEngine.sol

The core contract that manages the minting, burning, and liquidation processes:

• Handles collateral deposits and withdrawals
• Controls the minting and burning of DSC tokens
• Manages liquidations for undercollateralized positions
• Maintains the health factor (collateralization ratio) for all users

DecentralizedStableCoin.sol

The ERC20 token implementation of the stablecoin:

• Implements standard ERC20 functionality
• Adds burn functionality for redemption
• Controlled by the DSCEngine contract

Key Features

Collateralization System

• Minimum Health Factor: 1.0 (representing 100%)
• Liquidation Threshold: 50% (positions must maintain 200% collateralization)
• Liquidation Bonus: 50% bonus for liquidators

Liquidation Process

When a user's position becomes undercollateralized (health factor < 1.0):

1. Any user can trigger liquidation
2. The liquidator pays back some of the user's debt
3. In return, they receive an equivalent amount of collateral plus a bonus
4. This process helps maintain the protocol's overall solvency

Price Feeds

Uses Chainlink price feeds to obtain reliable collateral valuations.

Functions

User Operations

• depositeCollateralAndMintDSC: Deposit collateral and mint DSC in one transaction
• depositeCollateral: Deposit supported tokens as collateral
• redeemCollateralForDsc: Burn DSC and redeem collateral in one transaction
• redeemCollateral: Withdraw collateral (subject to maintaining health factor)
• mintDsc: Mint new DSC tokens (subject to collateralization requirements)
• burnDsc: Burn DSC tokens

Liquidation

• liquidateDsc: Liquidate undercollateralized positions

View Functions

• getHealthFactor: Check a user's health factor
• getAccountCollateralValueInUSD: Get the USD value of a user's collateral
• getAccountInformation: Get a user's DSC debt and collateral value

Getting Started

Prerequisites

• Node.js and npm
• Foundry/Forge for testing

Installation

1. Clone the repository:

git clone https://github.com/your-username/dsc-stablecoin.git
cd dsc-stablecoin

2. Install dependencies:

npm install

3. Compile contracts:

forge build

Testing

Run the test suite:

forge test

Deployment

Deploy to a local network:

forge script script/DeployDSC.s.sol --rpc-url http://localhost:8545 --broadcast

Security Considerations

• The system is designed to be overcollateralized at all times
• Liquidation mechanisms help maintain solvency
• Price feed oracles are checked for staleness
• Reentrancy protection is implemented

License

This project is licensed under the MIT License - see the LICENSE file for details.

Author

@roudra323