Complete Guide to DBanks Concepts
DBanks CNBM | The Decentralized Gateway for CNCurrency Issuance
DBanks is an immutable and autonomous smart contract responsible for managing collateral, issuing RC tokens (Residual Claims), and triggering mint or burn instructions for a specific CNCurrency.
Within the CNBM ecosystem, a separate instance of DBanks is deployed for each type of collateral. For example:
- DBanksUSD_ETH for ETH-backed issuance
- DBanksUSD_GOLD for gold-backed issuance
Issuance Process
In each issuance cycle, a defined amount of base asset is first locked as collateral within DBanks. Then:
- An RC token is minted to represent the volatile residual value of the collateral after deducting the guaranteed portion.
- A mint instruction is issued for a specific CNCurrency (such as CNUSD) to the corresponding CNCurrency contract.
The minting ratio of CNCurrency is determined by the DVTM model and depends on the collateralization parameters defined for each underlying asset.
Role of PD Token Holders
Only holders of PD (Primary Dealer) tokens are authorized to initiate the minting process, as they are the system's core stability agents.
However, CNCurrency redemption is open to all users without restriction.
Core Functions of DBanks
1. Minting CNCurrencies and RC Tokens (Fee-Free)
Upon deposit of a volatile asset, DBanks issues:
- 1 CNCurrency (fixed-value token)
- 1 RC (reflecting residual volatile value)
The minting process is completely free of charge.
2. Redemption of Collateral (Fee-Free)
Users can return one CNCurrencies together with its corresponding RC token to redeem the underlying asset. Redemption is also fully fee-free.
3. Fee Calculation and Distribution from CNCurrencies Transfers
DBanks calculates and distributes transfer fees of CNCurrencies on each active blockchain PD Token holders.
Advanced Capabilities of DBanks
1. RC Debt Issuance (Open to All RC Holders)
RC Debt Issuance allows any RC holder to borrow interest-free and without expiry, using their RC as collateral. The RC token remains locked in the user's wallet via smart contract control until full repayment.
The maximum loan-to-value (LTV) ratio is determined at the moment each DBanks is deployed and fixed forever (e.g., 0.99 or 0.999). It is immutable after deployment.
2. AutoLoop (Exclusive to PD Holders)
AutoLoop is an advanced feature allowing PD token holders to automate the repetitive cycle of:
- minting CNCurrencies
- receiving RC
- borrowing against RC
- reinvesting the base asset
PDs can choose to:
- run AutoLoop until no more debt can be drawn, or
- specify a fixed number of loops (e.g., 10 or 20 iterations)
AutoLoop Example: Minting vs. Locked Collateral
Assuming a PD starts with 1 RCSOL and the LTV is set at 0.99:
- After 10 loops: 9.466 CNUSD minted | 0.904 RCSOL remaining | 9.561 RCSOL locked
- After 25 loops: 21.995 CNUSD minted | 0.778 RCSOL remaining | 22.218 RCSOL locked
- After 50 loops: 39.104 CNUSD minted | 0.605 RCSOL remaining | 39.499 RCSOL locked
- Full AutoLoop (until max): 99 CNUSD minted | 0.00000001 RCSOL remaining | 99.999 RCSOL locked
RC Debt Issuance: Transforming Collateral into Controlled, Live Debt
A New Model for Collateral and Liquidity
In the CNBM model, CNCurrencies are issued based on fully reserved collateral — for example, 1 SOL is required to mint 1 CNAED. While this creates strong backing guarantees, it introduces several practical limitations:
- Significant locking of base assets in smart contracts
- Reduced circulating liquidity in the system
- Increasing pressure on collateral reserves as demand for supply grows
To address these challenges, CNBM introduces RC Debt Issuance — a mechanism that allows the system to shift from static collateralization to controlled debt-based liquidity.
Core Concept: Replacing Locked Collateral with Active, Trackable Debt
The RC (Residual Claim) token represents a formal debt obligation of the DBanks to its holder. In the base model, this debt is settled only when RC and the corresponding CNCurrency are returned simultaneously, upon which the DBanks is obligated to redeem the original base asset.
With RC Debt Issuance, users can lock their RC tokens inside the DBanks and receive a partial, interest-free, time-unrestricted loan in the original base asset. The loan amount is less than the full value of the RC — for example, 0.5 or 0.9 units of the underlying.
How Backing Is Maintained
- The RC token used as collateral remains locked until full loan repayment
- Therefore, no one — including the RC holder — can redeem the underlying asset during that time
- This allows the DBanks to re-release part of the asset without compromising its redemption obligations
A Fundamental Shift in How Collateral Is Defined
This model replaces passive asset locking with a dynamic system where backing is represented by controlled, live debt obligations.
From a financial and systems design perspective:
- RC is not merely a synthetic token, but an active debt note issued by the DBanks
- Through RC Debt Issuance, the DBanks preemptively delivers part of its own outstanding debt as liquidity
- Because it retains custody and lock over the RC, redemption is fully restricted until repayment
- As a result, the system remains fully solvent and accountable at all times
Key Benefits of This Model
- Reduces the need for permanent base asset reserves
- Increases system-wide liquidity without inflating CNCurrency supply
- Ensures full coverage of CNCurrencies remains intact
- Minimizes risk of sudden redemption pressure or collateral shortfall
Summary
RC Debt Issuance
RC Debt Issuance redefines CNCurrency backing:
Rather than relying on locked reserves, backing is preserved through a managed network of enforceable, non-redeemable debt positions.
This allows the system to circulate capital more efficiently, while retaining the structural integrity and solvency required for CNCurrency redemption under all conditions.
Key Takeaways
- Each volatile asset is split into two: fixed CNCurrencies + variable RC
- CNCurrency is only redeemable when paired with its corresponding RC
- All minting, redemption, and burning processes are non-custodial and fully on-chain
- Only PDs can mint CNCurrencies; redemption is open to all users
- CNCurrency transfer fees are distributed between RC and PD holders
- RC Debt and AutoLoop features allow capital efficiency while maintaining overcollateralization
- Each blockchain has its independent DBanks instance with local PDs and parameters
- The only common element across chains is CNCurrencies, maintaining its universal value and functionality
- The maximum loan ratio (LTV) is fixed at the time of each DBanks's creation and immutable thereafter
RC Debt Issuance redefines CNCurrency backing:
Rather than relying on locked reserves, backing is preserved through a managed network of enforceable, non-redeemable debt positions.
This allows the system to circulate capital more efficiently, while retaining the structural integrity and solvency required for CNCurrency redemption under all conditions.