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System Lifecycle

The dUSD market will be the first of many on DittoETH. The following example will track the lifecycle of dETH and the asset: dUSD.


  • Before a market is established, users must enter with ETH or an accepted LST and mint dETH. This occurs using deposit & depositEth in the BridgeRouterFacet.
  • Once a market is sufficiently established and has enough external liquidity, users can sell stable assets like dUSD via depositAsset in VaultFacet.


  • dUSD is created by a shorter who is posting dETH collateral matching with a bidder who wants dUSD for dETH. A short order is created using createLimitShort in ShortOrdersFacet.
  • Bids can be created using createBid in BidOrdersFacet.
  • Once dUSD is created, users can also sell directly for dETH using createAsk in AskOrdersFacet.
  • Unlike short orders, bids and asks can be market orders.


  • Once created, users are able to remove dUSD from the system and mint the respective ERC-20 equivalents via withdrawAsset in VaultFacet.
    • This will allow users to create liquidity on external protocols such as Uniswap, Curve, etc.
  • Another way to exit the system is to redeem dETH for the underlying LSTs. This occurs in BridgeRouterFacet:
    • withdraw gives the user the LST directly.
  • A large portion of the dETH should be locked in as collateral to secure the short positions. So most dETH cannot be redeemed until shorters have winded down their positions.

Manage Shorts

  • In order to maintain a healthy CR, shorters can use the following in ShortRecordFacet:
    • increaseCollateral: increases collateral to prevent liquidation.
    • decreaseCollateral: decreases collateral, which may allow a user to open additional shorts.
    • combineShorts: combine the debt and collateral of multiple shorts.
  • Shorters can close or reduce their debt positions using the following in ExitShortFacet:
    • exitShortWallet: burn dUSD from their wallet.
    • exitShortErcEscrowed: decrease dUSD from their virtual account.
    • exitShort: buys back debt from the orderbook using the short record's collateral.


  • Shorts that have fallen below the liquidationCR are available for liquidations.
    • liquidate in PrimaryLiquidationFacet calls are incentivized with a fee.
    • Using liquidateSecondary in SecondaryLiquidationFacet users can bring dUSD directly and clear bad debt. No fee is given.