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Multi Collateral Dai Developer Guide

work in progress

This is a more in depth description of the Dai core contracts. The previous iteration of Dai was called Single Collateral Dai (SCD), or sai, and is found at https://github.com/makerdao/sai

Tooling

  • dapp.tools
  • solc v0.5.0
  • tests use ds-test and are in files ending .t.sol

Units

Dai has three different numerical units: wad, ray and rad

  • wad: fixed point decimal with 18 decimals (for basic quantities, e.g. balances)
  • ray: fixed point decimal with 27 decimals (for precise quantites, e.g. ratios)
  • rad: fixed point decimal with 45 decimals (result of integer multiplication with a wad and a ray)

wad and ray units will be familiar from SCD. rad is a new unit and exists to prevent precision loss in the core CDP engine.

The base of ray is ONE = 10 ** 27.

A good explanation of fixed point arithmetic can be found at Wikipedia.

Multiplication

Generally, wad should be used additively and ray should be used multiplicatively. It usually doesn't make sense to multiply a wad by a wad (or a rad by a rad).

Two multiplaction operators are used in dss:

  • mul: standard integer multiplcation. No loss of precision.
  • rmul: used for multiplications involving ray's. Precision is lost.

They can only be used sensibly with the following combination of units:

  • mul(wad, ray) -> rad
  • rmul(wad, ray) -> wad
  • rmul(ray, ray) -> ray
  • rmul(rad, ray) -> rad

Code style

This is obviously opinionated and you may even disagree, but here are the considerations that make this code look like it does:

  • Distinct things should have distinct names ("memes")

  • Lack of symmetry and typographic alignment is a code smell.

  • Inheritance masks complexity and encourages over abstraction, be explicit about what you want.

  • In this modular system, contracts generally shouldn't call or jump into themselves, except for math. Again, this masks complexity.

CDP Engine

The core CDP, Dai, and collateral state is kept in the Vat. This contract has no external dependencies and maintains the central "Accounting Invariants" of Dai.

Dai cannot exist without collateral:

  • An ilk is a particular type of collateral.
  • Collateral gem is assigned to users with slip.
  • Collateral gem is transferred between users with flux.

The CDP data structure is the Urn:

  • it has ink encumbered collateral
  • it has art encumbered debt

Similarly, a collateral Ilk:

  • it has Ink encumbered collateral
  • it has Art encumbered debt
  • it has take collateral scaling factor (discussed further below)
  • it has rate debt scaling factor (discussed further below)

Here, "encumbered" means "locked in a CDP".

CDPs are managed via frob(i, u, v, w, dink, dart), which modifies the CDP of user u, using gem from user v and creating dai for user w.

CDPs are confiscated via grab(i, u, v, w, dink, dart), which modifies the CDP of user u, giving gem to user v and creating sin for user w. grab is the means by which CDPs are liquidated, transferring debt from the CDP to a users sin balance.

Sin represents "seized" or "bad" debt and can be cancelled out with an equal quantity of Dai using heal(u, v, rad): take sin from u and dai from v.

Note that heal can also be used to create Dai, balanced by an equal quantity of Sin.

Finally, the quantity dai can be transferred between users with move.

Rate

The ilk quantity rate define the ratio of exchange between un-encumbered and encumbered Debt.

This quantity allows for manipulation of debt balances across a whole Ilk.

Debt can be seized or injected into an ilk using fold(i, u, rate), which increases the dai balance of the user u by increasing the encumbered debt balance of all urns in the ilk by the ratio rate.

CDP Interface

The Vat contains risk parameters for each ilk:

  • spot: the maximum amount of Dai drawn per unit collateral
  • line: the maximum total Dai drawn

And a global risk parameter:

  • Line: the maximum total Dai drawn across all ilks

The Vat exposes the public function:

  • frob(ilk, dink, dart): manipulate the callers CDP in the given ilk by dink and dart, subject to the risk parameters

Liquidation Interface

The companion to CDP management is CDP liquidation, which is defined via the Cat.

The Cat contains liquidation parameters for each ilk:

  • flip: the address of the collateral liquidator
  • chop: the liquidation penalty
  • lump: the liquidation quantity

The Cat exposes two public functions

  • bite(ilk, urn): mark a specific CDP for liquidation
  • flip(n, wad): initiate liquidation