Reward Vault Request for D2 Finance’s dgnBeraland
1. Proposer Details
- Email: hwxfrank@d2.finance
- Proposer’s project name: D2 Finance
- Proposer’s X account: https://x.com/HWxFrank
- Best Telegram Handle for questions/fixes: @HWxFrank
- Affiliation: D2 team
2. Protocol Details
D2 Finance is a Multi-strategy Fund delivering Tokenized Derivatives Strategies and derivatives trading, in a 100% on-chain solution.
D2 Finance brings institutional expertise into DeFi, with a 10+ year history of managing capital for some of the largest allocators in the world (PAG, Northwest Investments HK, etc). This experience translates into robust, actively managed strategies capitalizing on market inefficiencies on-chain
- Protocol Name: D2 Finance
- Protocol Type: On-chain multi-strategy hedge fund, Tokenized Derivatives Strategies
- Protocol X profile link: https://x.com/D2_Finance
- Protocol docs link: https://gitbook.d2.finance/
- Protocol audits links: Paladin & Cyfrin audits have secured >$250m trading volume on D2 Finance Audits | D2.Finance
- Does the protocol have any relationship with current Berachain validators: In progress
3. Contract/Pool Details
- Contract Name: dgnBeraland
- Contract Address: 0xbE75c8A7E58C7901D2e128dc8d3b6DE2481F1F79
- Contract Type / Configuration: ERC-4626 compatible vault with customized trading strategy smart contract
- Describe how the contract work:
The Vault is an ERC-4626 compatible single staking vault, which handles all deposits, withdrawals, and share accounting functions. When a user deposits funds in the vault, they receive an ERC-20 vault token representing their share in the vault
Strategy Vault Flow
- The strategies are deployed in cycles called “epochs.” Each epoch has a funding phase, a trading phase, and a withdraw phase.
- Funding Phase: When the vault opens in the funding phase, users can deposit the vault’s underlying currency.
- Trading Phase: During the trading phase, users may not deposit or withdraw, and the trader may take custody of the vault’s funds to run the strategy mandates.
- Withdraw Phase: At the conclusion of the epoch, the funds are returned to the vault +/- PNL for users to withdraw at NAV or rollover to next epoch.
- Contract Fees: 2% management fee annualized, 20% performance fee on profits
- Existing Liquidity / TVL: 300 WETH
- Identify any address(es) controlling more than 10% of the contract shares: Users holder distribution dgnUpside (dgnUpside) Token Tracker | BeraScan
- Is the contract upgradable?: No
- Contract Control: Multisig
- Additional details on Contract Control:
Security | D2.Finance
Vault Owner / Key Security
Each vault smart contract, when deployed sets an address as the owner of the vault.
The vault owner default is a 4/7 multi-sig consisting of 1 D2 team member and 6 trusted contributors/rangers
The vault owner at no time can access customer funds, function of the owner is:
- Start Epoch
- Set Whitelist / blacklist
- Set deposit caps
- Manage trader executor roles
In a case where the Executor Role (D2 trading team) private keys are exposed, the vault owners can remove permission and set a new trusted trader address as the executor role approved for trading. The executor role permissions are defined at deployment and limit interactional risk to an immutable set of pre-approved assets, protocols, and functions.
The executor role never overlaps with vault ownership role.
- Is the contract verified: Yes
- Can the contract be paused: Yes
- Does the contract rely on oracles: No
4. Token Details
Provide the following details for each token in the contract (up to 5):
For Major Tokens (Vault deposit asset):
- Name: USDC.e
- Symbol: USDC.e
5. Token / Project Background / Incentive Token Whitelist
Only two tokens can be whitelisted for use as incentives in a Reward Vault. Indicate which tokens will be used and provide all relevant information below.
- Incentive Token 1: WBERA
- Estimated 3000 BERA / month, exact distribution is dependant on vault strategy yield, tvl and market opportunities
- The D2 Finance team will manage the incentives distribution through a new team SAFE multi-sig 3/4 specific for incentive management
6. Growth, Community & Ecosystem Impact
Why This Contract Matters:
- How will it benefit Berachain?
- Will it deepen liquidity for a major ecosystem token (e.g., BERA or a core stable asset)?
- Does it enable high-impact trading pairs that boost adoption or integrate with other Berachain projects?
dgnBeraland provides an advanced structured approach to Berachain’s BERA token exposure. In addition to passively accumulating rewards, it offers a calibrated mix of leverage, DeFi efficiency, and options-based yield generation to monetize BERA’s upside potential, enhanced by Berachain’s Proof of Liquidity (PoL) mechanism.
This chart shows dgnBeraland’s performance vs. benchmark in Epoch 1. The strategy (blue line) significantly outpaced the benchmark (red line), achieving ~12% higher returns. This strong outperformance demonstrates the strategy’s ability to generate alpha (excess gains over the market).
Key Benefits:
1. Deepens Liquidity for Core Tokens and Pools, while simultaneously directing volume through our partner protocols
As an example, dgnBeraland specifically trades BERA and BERA derivatives and has traded $5m over 2 epochs.
- The strategy packages synthetic call options to achieve leverage exposure to the BERA token.
- If IVX’s 0DTE options trade at a premium, we execute a calendar spread, selling short-term IVX calls while holding long BERA exposure
- To further improve capital efficiency, BERA tokens will be used as collateral to borrow NECT and post additional IVX margin (or swap to USDC based on market rates, available markets/integration)
- OOGA BOOGA ensures the best execution across various DEXs and order flow mechanics to secure optimal initial execution price and delta hedging for the strategy
- This strategy provides net buy pressure for the BERA token through strategic TWAPs and arbitrage
dgnBerland has traded $5m+ USDC notional on BERA and BERA derivatives in Berachain protocols over 2 epochs.
2. Creates Net Positive Value
By tapping into Berachain’s PoL system, dgnBerland generates sustainable yield and earns BGT rewards. These rewards are either distributed directly to users as yield or used as collateral to increase trading volume and ecosystem upside.
As a reward vault, dgnBerland amplifies utility rather than extracts, by further re-deploying BGT rewards in collateral form across integrated protocols, benefiting both users in the form of higher potential yield and ecosystem protocols as greater volume
3.0 Synergistic Upside
hBERA’s (D2 Finance strategy) long BERA holdings put it in a prime position to sell BERA upside while dgnBeraland is a prime buyer of that upside
In essence:
- hBERA sells high (as it’s long BERA holdings)
- dgnBeraland buys low (capitalizing on discounts)
- Result: A 20% volatility spread turned into risk-free profit for both sides
Simplified Example:
- If the market prices options at 100% volatility, dgnBeraland buys at 90% while hBERA sells at 110%.
- As hBERA Tvl is about 22k BERA the available leverage for dgnBeraland is revised in between 0.5x to 1.5x
dgnBeraland Strategy Details:
-https://medium.com/@D2.Finance/dgnberaland-the-smart-strategy-to-harness-bera-1-3x-upside-with-only-30-day-lockup-4ce09a659aa7
-dgnBeraland: Epoch 1 Delivers 110% APR — Here’s How We’re Doubling Down on Your Gains | by D2 Finance | Mar, 2025 | Medium
Potential Volume / TVL:
The strategy filled a $690k deposit cap during the Boyco launch and has retained $547,939 through the second epoch.
This strategy has the capacity to scale to meet foreseeable demand up to ~$1-2m at current market conditions. .
dgnBerland has traded $5m+ USDC notional BERA and BERA derivative in Berachain over 2 epochs.
As a reward vault, we aim to utilize the additional BGT to enhance user yields, create arbitrage opportunities for BERA buy opportunities, and enhance options pricing.
Synergies with Other Protocols:
All D2 strategies have strong synergies with other Berachain protocols as our trading strategies leverage their protocol for flow and execution.
Although the vault receipt token itself is not typically traded, the underlying assets within the vault are actively deployed across the Berachain ecosystem, generating substantial trading volume through our partner protocols.
This strategy vault primarily drives flow via OogaBooga, IVX, Beraborrow, Beraland, and BEX.
Marketing / Promotion:
Are there plans to co-market with another project to bootstrap liquidity?
Yes, continued with IVX, Beraland, and OogaBooga
Long-Term Vision:
How could this reward vault evolve over time? (E.g., eventually becoming a core liquidity pair or a major stable pool for the chain.)
The D2 architecture tokenizes each derivatives strategy vault as a fully tradable, permissionless ERC-20 token. For dgnBeraland, this creates future opportunities within the Berachain ecosystem:
- This will continue to be a source of smart leveraged exposure to the BERA token for those wanting high alpha opportunity
7. Verification
Please post the following text with the provided X account:
Verification post: https://x.com/D2_Finance/status/1910118845269815489
8. Risk Mitigation
Details: Addressing Risk | D2.Finance
D2 Finance prioritizes capital protection and leverages institutional standards and risk controls:
Highlights:
- Stress-Tested: Positive returns during August 2024 / February 2025 market crashes.
- Secure Execution: All trades settled on-chain; audited by [Paladin] + [Cyfrin].
- Risk is auditable on-chain. There is no centralized exchange exposure, with all trades/hedges done through defi platforms, and settled/executed on-chain.
- Built by ex-PAG quants: Institutional rigor in every aspect of operation
- Vaults: This is an ERC4626 compatible smart contract and represents the secure user interface
- Strategy Contract / Trader OMS - This serves as the institutional grade internal interface for fund custody and active trading within the strategy & smart contract framework. The OMS embeds traditional hedge fund risk limit parameters within its smart contracts. While traders / pod can engage with compatible and approved DeFi applications/tokens using the allocated capital, direct withdrawals are restricted.
Our architecture has been audited and rigorously battle-tested with >$250 million dollars in notional value traded across various DeFi protocols.