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USDL is a decentralized and overcollateralized stablecoin modeled after DAI but created with the underlying code from Compound v2 (current version as at April 2022).
The code is in essence a simple money market with only two assets being WLTC and USDL.
WLTC is the only initial asset with collateral. USDL price is defaulted to 1 and WLTC price is updated manually after reading from CEX. At a later date it is expected to go off TWAPS or other on chain Oracles.
USDL collateral factor is set to 50%. Reserve factor is 10%.
The only way new USDL can come into circulation is if someone borrows it via staking WLTC on the platform, ensuring the continuous collateralization of USDL. Interest rates will be balanced continuously to keep the token close to peg.
If USDL is below peg, it becomes less attractive to mint more as the price is set to 1 on the system. You can instead buy it on the market and repay your debts cheaply. Separately the interest rates would also go up to boost staking in the platform and disincentivizing minting.