Decentralized StableCoin (DSC)

A minimal, overcollateralized, algorithmic stablecoin system inspired by MakerDAO's DAI but simplified and trust-minimized.

Overview

This project implements a decentralized stablecoin system that maintains a 1:1 peg with USD, backed by crypto collateral (WETH, WBTC). It ensures overcollateralization, preventing the stablecoin supply from exceeding the USD value of locked collateral.

Key features:

• Exogenously collateralized (uses crypto tokens like WETH/WBTC)
• Dollar-pegged with oracle-based price feeds
• Algorithmically stable (no governance or fees)
• Fully open-source and testable via Foundry

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Project Structure

├── src/  
│ ├── DSCEngine.sol # Core stablecoin logic (mint/redeem/liquidation)  
│ └── DecentralizedStableCoin.sol # ERC20 token (burnable, mintable by engine)  
├── script/  
│ └── DeployDSC.s.sol # Deployment script  
├── test/ # Unit & invariant tests  
├── lib/ # External libraries (via forge install)  
├── foundry.toml # Foundry config file  
└── Makefile # Task runner for common actions

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Requirements

• Foundry (Forge & Cast)
• .env file (optional) with:

SEPOLIA_RPC_URL=<your_sepolia_rpc_url>
ACCOUNT=<your_private_key>
ETHERSCAN_API_KEY=<your_etherscan_api_key>

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Deployment

Local (Anvil):

make anvil
make deploy

Sepolia:

make deploy ARGS="--network sepolia"

This deploys the DSCEngine and DecentralizedStableCoin contracts and verifies them on Etherscan (if API key provided).

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Features

Deposit Collateral

dscEngine.depositCollateral(wethAddress, 100e18);

Mint DSC

dscEngine.mintDSC(50e18);

Burn and Redeem

dscEngine.redeemCollateralAndBurnDSC(weth, 100e18, 50e18);

Liquidation

If a user falls below the required health factor (collateral value / debt):

dscEngine.liquidate(weth, user, debtToCover);

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Access Control

Only the DSCEngine can mint or burn DSC. This is enforced via OpenZeppelin's Ownable in DecentralizedStableCoin.

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Testing

Run full unit and invariant tests:

make test

Test with logs and traces:

forge test -vvvv

Check test coverage:

make coverage

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Invariant Testing

Tests assumptions like:

• Protocol is always overcollateralized

• Collateral + bonus can't be overdrawn

• Health factor improves post-liquidation

See: test/fuzz/InvariantsTest.t.sol

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Commands (Makefile)

make clean       # Clean the repo
make update      # Update dependencies
make deploy      # Deploy contract
make anvil       # Start local testnet
make test        # Run tests
make snapshot    # Create state snapshot
make format      # Format code with forge fmt