LSDai creates a Euro-dollar like construct, that is a future on the Compound Dai lending rate over the duration of the contract.
It enables three different types of users to gain the kind of exposure to the interest rate fluctuation that fits their profile, while aligns incentives.
- Hedgers: can insure themselves against loss of income.
- Speculators: expect Dai’s lending interest rate on Compound to go up or down, and buy long or short Dai interest tokens from the LSDai Market Makers for Dai.
- Market makers: manage the minting and selling of the long or short Dai interest tokens