DSC Protocol Documentation

Overview

DSCprotocol is the world's first fully decentralized, AI-powered, multichain stablecoin protocol designed for real-world usability and composable DeFi. Users can mint USD-pegged stablecoins backed by a diverse range of crypto and tokenized real-world assets, swap collateral without losing peg, and access cross-chain utility via an intelligent AI wallet.

Built with security and stability as core principles, DSC leverages advanced AI technology to provide not just a stablecoin, but an entire financial ecosystem that bridges traditional finance with the decentralized world.

Multichain Strategy

DSC's Multichain Architecture

DSC is designed from the ground up to operate seamlessly across multiple blockchains, creating a unified stablecoin experience regardless of which network users prefer.

Native Collateral Deposits

Users can deposit native assets directly on their preferred blockchain. This eliminates the need for bridging assets before minting DSC, reducing gas costs and complexity.

Wrapped Assets

The protocol supports wrapped versions of major assets across chains, ensuring liquidity and compatibility regardless of the original asset's native blockchain.

Secure Bridges

Our custom-built secure bridge infrastructure facilitates cross-chain transactions with multiple security layers, including time-locks, multi-sig requirements, and automated monitoring.

Seamless User Experience

The protocol abstracts away the complexity of cross-chain interactions, providing users with a smooth, unified experience regardless of which blockchain they're using.

DSC = One Protocol, All Chains

Users can mint or redeem DSC from any supported chain, diversifying risk across ecosystems while maintaining stability across all market conditions.

How It Works

Stablecoin Minting Process

The DSC protocol follows a straightforward yet robust process for minting, managing, and redeeming stablecoins:

1. Collateral Deposit

Users deposit supported assets (ETH, BTC, SOL) into the protocol's smart contracts. Future support will include tokenized real-world assets like Gold and Silver ETFs.

All collateral assets must have a minimum market cap of $2B to ensure sufficient liquidity and stability.

2. Minting

Based on the value of deposited collateral, users can mint DSC stablecoins at a 150% overcollateralization ratio. For example, $1,500 worth of ETH allows minting of 1,000 DSC.

This conservative ratio helps maintain stability even during significant market volatility.

3. Liquidation

If the collateral value falls below 110% of the minted DSC value, the position becomes eligible for liquidation to protect the protocol's solvency.

The protocol includes early warning notifications through the AI assistant to help users avoid liquidation.

4. Growth

As collateral value increases, users can mint additional DSC against their existing collateral, maximizing capital efficiency.

The AI assistant can suggest optimal times to mint additional DSC based on market conditions and collateral performance.

• Smart Contracts live on Base + wrapped assets used across ETH/BTC/SOL chains

• Cross-chain compatibility ensures fast, cheap execution with maximum resilience

Key Features

1. Decentralized USD-Pegged Stablecoin (DSC)

Backed by collateral such as BTC, ETH, SOL, and tokenized RWAs (Gold ETFs, Silver ETFs, Tesla shares, etc.)
Minimum collateral requirement: assets must have a $2B+ market cap
110% overcollateralization requirement to mint DSC
Automated liquidation system for undercollateralized positions

2. Collateral Swap Engine

Enables users to switch backing assets (e.g., ETH to BTC or Gold ETF) without burning DSC
Helps users manage volatility, risk, and exposure
Enhances flexibility while maintaining the $1 peg

3. Hybrid Collateral Fallback System

In cases where DSC liquidity is unavailable during liquidation, the protocol uses hybrid stablecoins like DAI or USDT to cover positions
Ensures peg maintenance and protocol resilience in volatile market conditions

4. Multichain Native Architecture

Live on Base, with planned support for Solana, Ethereum, Arbitrum, and more
Chain-aware logic determines optimal network for transaction routing
Built-in oracle system (e.g., Chainlink) ensures reliable cross-chain price feeds

5. AI Wallet Assistant

World's first fully voice-to-voice and conversational wallet that allows natural interaction with your crypto
Users can perform tasks like sending money, paying bills, and topping up mobile through chat or voice commands
AI selects the best network, executes transactions, and manages wallet interactions
Advanced natural language processing understands intent and context, even with complex financial requests
Provides real-time financial insights, spending analysis, and personalized recommendations based on usage patterns

6. DSC FX Engine (Coming Soon)

Enables minting of other fiat-pegged stablecoins (e.g., Euro, Dirham, CAD, SGD) backed by DSC
Uses synthetic peg and real-time FX oracle integration
Expands DSC into a multicurrency stablecoin layer

7. DEX Integration

Users can swap collaterals (e.g., Gold to BTC) within the protocol
All trades are subject to low protocol fees (0.1–0.3%)
Fees go to protocol treasury or governance pool

AI Agent Technology

The DSC protocol features a groundbreaking AI agent system that transforms how users interact with their digital assets and the DeFi ecosystem.

Voice-to-Voice Interaction

The world's first fully voice-enabled crypto wallet allows users to speak naturally to their wallet and receive spoken responses. Users can say "Send $50 to John for dinner" or "How much ETH do I have?" and the AI will understand and execute these commands.

Contextual Understanding

Unlike basic command systems, our AI understands context, remembers previous interactions, and can handle complex, multi-step financial requests. It can interpret "Move some of my ETH to a safer asset" by analyzing market conditions and suggesting appropriate actions.

Intelligent Transaction Routing

The AI automatically selects the optimal blockchain for each transaction based on current gas fees, congestion, and security considerations. This ensures users always get the best combination of speed, cost, and reliability without needing technical knowledge.

Financial Intelligence

The AI provides personalized financial insights by analyzing spending patterns, collateral health, and market conditions. It can proactively alert users to potential liquidation risks, suggest portfolio rebalancing, or identify opportunities to optimize yield on their assets.

Example AI Interactions:

User: "I need to pay my rent next week, about $1,200. What's the best way to do that?"
AI: "You currently have $800 in DSC and ETH worth $2,000. I can either convert some ETH to DSC now, or schedule the conversion closer to your payment date. Current gas fees are low, so converting now might be advantageous."
User: "My collateral ratio is getting low, what should I do?"
AI: "Your current ratio is 115%, approaching the liquidation threshold of 110%. You have three options: add more collateral (you have 0.5 ETH in your wallet), repay 200 DSC to improve your ratio to 130%, or swap some of your SOL collateral to ETH which has been more stable recently."

The AI agent is continuously learning and improving based on user interactions and market conditions, while maintaining strict privacy standards. All sensitive data is processed locally on the user's device whenever possible, with optional cloud processing for more complex analyses.

Security Layers

Security is a foundational principle of the DSC protocol, implemented through multiple layers of protection:

Smart Contract Security

Multiple independent security audits by leading firms
Formal verification of critical contract components
Time-locked upgrades with multi-signature requirements
Bug bounty program with up to $1M in rewards for critical vulnerabilities

Economic Security

Conservative 150% collateralization ratio
Diversified collateral types to prevent single points of failure
Circuit breakers for extreme market volatility
Gradual liquidation mechanisms to prevent market crashes
Insurance fund to cover potential shortfalls

Oracle Security

Multiple independent price feeds for each asset
Median-based price calculation to eliminate outliers
Time-weighted average prices to prevent flash loan attacks
Heartbeat checks to ensure fresh data
Deviation thresholds to detect manipulation attempts

Cross-Chain Security

Custom-built secure bridge infrastructure
Multi-stage verification for cross-chain transactions
Fraud proof system with challenge periods
Validator network with slashing conditions
Isolation of chain-specific risks to prevent contagion

Security-First Development Philosophy

The DSC protocol follows a "security-first" development approach where new features are only implemented after thorough risk assessment, testing in isolated environments, and gradual deployment with limits that increase over time as confidence in the implementation grows.

Architecture Overview

Protocol Architecture Diagram

The DSC protocol is built with a modular architecture that enables flexibility, upgradability, and cross-chain functionality:

Collateral Vault Contracts (Multi-chain)

These smart contracts manage the deposit, withdrawal, and tracking of collateral assets across different blockchains. Each vault is chain-specific but follows a standardized interface, allowing for consistent interaction regardless of the underlying blockchain.

Oracle Feed & Liquidation Engine

This component continuously monitors collateral values using decentralized oracle networks, calculates health factors for all positions, and triggers liquidations when necessary. It includes sophisticated mechanisms to prevent oracle manipulation and ensure fair liquidation processes.

RWA Integration Modules

These specialized adapters connect the protocol to tokenized real-world assets like Gold ETFs, Silver ETFs, and tokenized equities. They handle the unique requirements of each RWA type, including custody verification, regulatory compliance, and specialized price discovery mechanisms.

AI Utility Layer

This is the intelligence hub of the protocol, powering the conversational wallet, financial analytics, and smart transaction routing. It combines on-chain data with market intelligence to provide personalized insights and automate complex financial operations through natural language interfaces.

Cross-Chain Messaging & Bridge Logic

This infrastructure enables secure communication and asset transfers between different blockchains. It uses a combination of cryptographic proofs, validator networks, and economic incentives to ensure the integrity and finality of cross-chain operations.


┌─────────────────────────────────────────────────────┐
│                  User Interface                     │
│  (Web App, Mobile App, AI Chat Interface)           │
└───────────────────────┬─────────────────────────────┘
                      │
┌───────────────────────▼─────────────────────────────┐
│                   Protocol Core                     │
├─────────────────┬─────────────────┬─────────────────┤
│   Vault Layer   │    AI Layer     │   Oracle Layer  │
├─────────────────┼─────────────────┼─────────────────┤
│    FX Layer     │  Bridge Logic   │   DEX Layer     │
└─────────────────┴─────────────────┴─────────────────┘
                      │
┌───────────────────────▼─────────────────────────────┐
│                 Blockchain Layer                    │
│  (Base, Ethereum, Solana, Arbitrum, etc.)           │
└─────────────────────────────────────────────────────┘

This modular design allows the protocol to evolve independently across different layers, enabling rapid innovation while maintaining security and stability. New blockchains, collateral types, or AI capabilities can be added without disrupting the core functionality.

Use Cases

Decentralized borrowing and lending
Multi-asset portfolio-backed stablecoin minting
Global remittances and real-world payments
Enterprise treasury and DeFi-native savings accounts
Cross-currency DeFi trading (via FX Engine)

Tokenomics & Governance (Planned)

Governance token for DAO proposals and parameter updates
Revenue sharing through protocol fees and swap engine
Incentives for DSC minting, staking, and FX utility usage

Roadmap

Phase 1

Base mainnet deployment, AI wallet v1, DSC stablecoin, basic DEX

Phase 2

FX Engine launch, additional chain integration (Solana, Arbitrum)

Phase 3

Mobile app, institutional onboarding, token launch

Phase 4

Full DAO governance, RWA expansion, AI wallet voice assistant