Summary

This DIP proposes to sunset DF as an active asset on Unitus by disabling new DF deposits and borrowing, while keeping all risk-reducing actions fully functional, including withdrawals, repayments, and liquidations.

The goal is to facilitate a structural shift of DF liquidity toward on-chain venues, while ensuring a smooth and non-disruptive exit path for existing users.

Background

Unitus has progressively evolved toward a strategy framework optimized for high-liquidity, highly composable assets, primarily stablecoins and blue-chip tokens with deep, resilient price discovery.

While DF remains a core governance and alignment token within the dForce ecosystem, its current liquidity profile and market structure are no longer well aligned with Unitus’ risk parameters for deposit and borrow markets.

In particular, DF liquidity has become increasingly fragmented, with a growing concentration on on-chain DEX venues rather than large centralized order books. This shift materially changes the risk surface for lending markets.

Motivation

The proposed changes are driven by risk management considerations, not by DF’s role or value within the broader ecosystem.

Key factors include:

• Reduced centralized liquidity depth, leading to thinner order books and higher price impact under stress
• Accelerating migration of DF liquidity to on-chain DEXs, increasing exposure to short-term volatility and liquidity shocks
• Elevated oracle manipulation and price distortion risk, especially during low-liquidity windows
• Higher liquidation uncertainty, where forced selling could amplify slippage and protocol loss

In this environment, allowing new deposits or borrowing of DF introduces asymmetric risk to Unitus users and the protocol as a whole, without corresponding upside.

Design Principles

This proposal is guided by three principles:

1. No user lock-in — all users must retain full ability to exit positions
2. Risk containment, not disruption — only risk-expanding actions are disabled
3. Protocol-level safety first — decisions prioritize long-term resilience over short-term asset coverage

Specification

If approved, Unitus will implement the following changes:

1. Disable new DF deposits
2. Disable new DF borrowing
3. Maintain full functionality for:
   • Withdrawals
   • Repayments
   • Liquidations
4. Gradually remove DF from Unitus UI entry points and supported asset lists, while preserving backend support for exits

No existing DF positions will be forcibly closed as part of this change.

Proposal

It is proposed that the dForce community approve the following parameter adjustments on Unitus:

• Set DF deposit cap to zero
• Set DF borrow cap to zero
• Keep withdrawals, repayments, and liquidations fully enabled

This approach allows Unitus to safely sunset DF exposure, reduce oracle and liquidity-driven risk vectors, and protect users during a period of evolving market structure — all without impacting DF’s governance function or its role elsewhere in the dForce ecosystem.