Introduction

DiversiFi is a protocol for packaging and tokenizing different pegged assets together for the purpose of reducing individual risk of ruin (RoR).

While our primary focus is stablecoins, the DiversiFi protocol can be applied to any group of assets that are expected to maintain a common peg.

The protocol works by defining target allocations for like kind assets and exchanging those assets with a pool for an index token representing a share of the pool’s reserves. The index token maintains parity with the underlying reserves making it a good alternative to any of the udnerlying reserves.

Index tokens can also be burned to redeem an equivalent share of the underlying reserves. The process for burning is simply the opposite of minting.

A DiversiFi pool does not distribute mint/burn fees to liquidity providers. Instead, swap fees contribute to an insurance fund, which is used to buy out bad assets from the pool in the event of a depeg. This allows the index tokens to maintain parity with their underlying tokens, and add a bit of extra assurance that they will maintain their pegs.