Inspired by the dual-purpose fund that has gained popularity in the US and China, we designed a mechanism that converts a basic crypto asset, such as ether, into dual-class tranched tokens, providing fixed incomes and leveraged capital gains for respective class. The collective system of tokens, smart contracts and other services are named DUO Network. The DUO concept can be extended beyond price-stable tokens. The flexible design of the smart contract allows collateralized assets being extended from ether to any ERC-20 tokens, and the price feed from any trading pair. For example: a DUO smart contract can be customized to accept 0x tokens (ZRX) as collateral and take a ZRX/BTC price feed.
The resulting Class A Token will be pegged to BTC value, while the Class B Token will have leveraged exposure to ZRX/BTC price. Another interesting use case could be: a DUO contract accepting ether as collateral and take an ETH/EOS price feed (it’s usually quoted in EOS/ETH but a simple reversion will do the math), can provide Class A Token pegging to EOS value, and Class B Token with leveraged exposure to ETH/EOS price (or from another perspective, a bear leveraged exposure to EOS/ETH price). All DUO Network contracts are operated entirely on Ethereum platform, taking price feeds from a carefully designed distributed oracle network. The core engineering team is going to publish an Engineering Whitepaper to explain the system design and implementation in details.
The design of the DUO Network requires a token whose value is implicitly linked to the growth
and adoption of the Network. Mechanisms used to reward good behavior and promote
expansion need to be tied solely to the success of the Network. A utility token owned by the
DUO Network is required.
The DUO Network Token is an ERC-20 compatible token issued on Ethereum, with limited
supply. It is the primary token used for DUO Network’s smart contracts. The operating DUO Member
can choose to pay fees in ETH or DUO. At early stage, payments in DUO will enjoy a discount
to encourage DUO’s adoption. All DUO collected by Beethoven will be burnt until 50% of
total issued DUO are left.