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Contract Flow

This page covers how the Dera Protocol calculates token value, manages capital flows, and allocates yield through its on-chain smart contract system.

The system consists of DeraEngine, DERA, and a modular set of DeFi protocol connectors. These components work together to handle conversions, allocate capital, mint yield-bearing tokens, and process redemptions while tracking TVL and exchange rate on-chain.

Exchange Rate​

The exchange rate of DERA is derived from the aggregate value of all assets deployed across active connectors, divided by total token supply:


Exchange Rate = TVL / Total DERA Supply


Where:

  • TVL = sum of all connector asset values, queried via Chainlink price feeds
  • Total DERA Supply = ERC-20 total supply as tracked on-chain


The exchange rate is computed on-chain at the time of each mint or redemption call. No spread mechanism is implemented. A configurable withdrawal fee, initially set at 0% and capped at 0.1%, may be applied at redemption. All fee parameters are governed via DeraAdmin and are publicly verifiable on-chain.

Yield Accrual​

The Dera Engine supports two LP token yield mechanisms depending on the integrated protocol:


Value-appreciating LP tokens (e.g. Fluid fTokens): the LP token itself increases in price over time.

Value_i(t) = LP_balance_i(t) x LP_price_i(t)

Rebasing LP tokens (e.g. Aave aTokens): the quantity of LP tokens held increases while price remains constant.

Value_i(t) = LP_balance_i(t) x 1

In both cases, yield accrual is reflected passively without any action from participants. As TVL increases while supply remains constant, the exchange rate adjusts upward for all holders simultaneously.

Capital Flow​

User Wallet
  |
  | Convert whitelisted stablecoin (USDC)
  v
DeraEngine Contract
  |
  | Validate input, calculate allocation weights
  | Route capital to connectors proportionally
  v
Protocol Connectors (Aave, Fluid, Compound)
  |
  | Deploy capital into external DeFi protocol
  | Accrue yield via LP token appreciation or rebase
  v
TVL increases => Exchange Rate adjusts upward
  |
  | On redemption: burn DERA, withdraw proportional USDC
  | (Safety Escrow as fallback if connector unavailable)
  v
User Wallet

Minting​

When a user calls depositTokenAndMintDera:

  1. Engine validates that USDC is whitelisted and the amount exceeds the minimum threshold
  2. Engine computes the current exchange rate
  3. DERA minted = deposit amount / exchange rate
  4. Capital allocated across connectors proportionally to current weights
  5. mint() called on DERA; DERAMint event emitted

Post-mint, the exchange rate is unchanged: TVL and supply increase proportionally.

Redemption​

When a user calls burnDeraAndWithdrawFunds:


  1. Engine computes the current exchange rate
  2. Gross USDC = DERA amount x exchange rate
  3. Net USDC = Gross USDC x (1 - fee)
  4. Funds withdrawn from connectors proportionally
  5. burn() called on DERA; DERA supply decreases
  6. Net USDC transferred to user; DERABurn event emitted


If a connector cannot fulfil its withdrawal obligation, the Engine reroutes through DeraSafetyEscrow. The user receives their full entitlement.

TVL Tracking​

The Dera Protocol does not take custody of user assets. TVL represents capital routed into third-party protocols via connectors, not assets held by Dera. TVL is computed by querying each active connector and summing asset values via Chainlink price feeds.

Allocation Management​

Pool allocation weights are set by the protocol administrator via DeraAdmin. All weights must sum to 100%. The Engine exposes the following allocation functions:


  • addProtocolPool: Adds a new connector pool with zero initial allocation
  • removePool: Withdraws capital and removes the pool
  • setProtocolPoolAllocation: Assigns percentage weights across active pools
  • Reallocation is achieved by updating weights and triggering proportional withdraw/deposit cycles


All allocation operations emit on-chain events and are restricted to ADMIN_ROLE.