## LitePSM User Guide
**Level:** Beginner
**Estimated Time:** 15 minutes
**Last Updated**: 2024-07-22
**Contact**: [e-mail]

### Overview

MakerDAO has launched LitePSM, a lightweight version of the Peg Stability Module (PSM). PSMs stabilize the DAI stablecoin against its pegged value by enabling users to trade DAI with other stablecoins like USDC (referred to as "gems") at fixed exchange ratios and fees. LitePSM's primary goal is to minimize gas costs for users. To achieve this, MakerDAO and its keeper ecosystem will absorb some of the gas expenses for all swaps by performing background bookkeeping tasks. This reduction in total gas costs benefits users swapping between DAI and USDC using PSMs, whether directly or through DEX aggregators like CoWSwap, 1inch, or Uniswap.

### Learning objectives

* Using the LitePSM
* Migrate your integration from PSM to LitePSM

### Pre-requisites

Familiarity with DAI and USDC ERC20 tokens.

### Guide

#### LitePSM Deployments

**Ethereum Mainnet**
* DAI LitePSM-USDC: [0xf6e72Db5454dd049d0788e411b06CfAF16853042](https://etherscan.io/address/0xf6e72Db5454dd049d0788e411b06CfAF16853042)
* [Makerburn Dashboard](https://makerburn.com/#/collateral/lite_psm_usdc_a)

#### PSM Roadmap

The roadmap of the Peg Stability Module (PSM) involves several key phases and deployments as MakerDAO progresses towards Endgame launch. Here's an overview of the planned changes:

##### Phase 1: DAI LitePSM-USDC Launch and current DAI PSM-USDC Migration

LitePSM-USDC will be launched in three phases, and the current PSM-USDC will be wound down according to this timeline. The exact dates and durations of each phase will be announced shortly.

*LitePSM Phase 1a: DAI LitePSM-USDC Launch [COMPLETE]*

* DAI LitePSM-USDC is currently live and available at [0xf6e72Db5454dd049d0788e411b06CfAF16853042](https://etherscan.io/address/0xf6e72Db5454dd049d0788e411b06CfAF16853042#code)

Efforts are being made to ensure at least 20 million USDC liquidity is available in LitePSM-USDC during Phase 1a, but actual liquidity after the LitePSM-USDC launch will depend on usage.

*LitePSM Phase 1b: DAI LitePSM-USDC Live [~ Aug 22]*
In Phase 1b, about 200 million USDC liquidity will migrate from DAI PSM-USDC to DAI LitePSM-USDC.

*LitePSM Phase 1c: DAI PSM-USDC Shutdown [~ Sep 19]*
DAI PSM-USDC will be entirely shut down in Phase 1c, with all remaining liquidity migrating from DAI PSM-USDC to DAI LitePSM-USDC.

#### Phase 2: New Stable and DAI LitePSM-USDC Wrapper Launch and Migration

During the MakerDAO Endgame Phase 1B launch (not to be confused with LitePSM Phase 1B launch), MakerDAO will introduce NewStable and NewGov tokens and deploy a new version of the LitePSM called the DAI+NST LitePSMWrapper-USDC. This new version will allow both NewStable token holders and DAI token holders to swap their stablecoins to and from USDC using a single LitePSMWrapper-USDC contract. Liquidity from the DAI LitePSM-USDC will remain in place and will not be migrated. The DAI+NST LitePSMWrapper-USDC contract will convert between DAI and NST before forwarding the swap transaction to the DAI LitePSM-USDC contract to perform the actual swap between DAI and USDC.

#### Phase 3: New Stable LitePSM-USDC Launch and Migration

In this phase, MakerDAO will deploy a new version of NST LitePSM-USDC exclusively for NewStable token holders to reduce the gas costs of NST to USDC swaps on the DAI+NST LitePSM-USDC contract. Some liquidity will migrate from DAI LitePSM-USDC version to a newly launched NST LitePSM-USDC setup exclusively for the NewStable token. Both DAI LitePSM-USDC and NST LitePSM-USDC versions will operate simultaneously and their liquidity will be balanced by ecosystem actors based demand for either token from the ecosystem.

#### Usage

##### Public
All users will have access to the following functions:
- `sellGem` : Sell USDC and receive DAI
- `buyGem` : Buy USDC with DAI

`sellGem` function accepts two inputs:

- `usr`: Address of the DAI recipient
- `gemAmt`: Amount of USDC being sold

The `gemAmt` is denominated in 6 decimals because "Gem" refers to USDC in a USDC LitePSM-USDC deployment, which uses 6 decimals instead of the more common 18 decimals. After a successful swap, this amount of USDC is transferred from `msg.sender` to the LitePSM-USDC. The function returns a value denominated in 18 decimals, representing the DAI amount the user receives. The `usr` address then receives the DAI ERC20 balance from the LitePSM-USDC.

`buyGem` function accepts two inputs:

- `usr`: Address of the USDC recipient
- `gemAmt`: Amount of USDC being bought

The `gemAmt` is denominated in 6 decimals because "Gem" refers to USDC in a USDC LitePSM-USDC deployment, which uses 6 decimals instead of the more common 18 decimals. After a successful swap, this amount of USDC is transferred to the `usr` address. The function returns a value denominated in 18 decimals, representing the DAI amount that `msg.sender` transfers from their address to the LitePSM-USDC. The `usr` address then receives the USDC balance from the LitePSM-USDC.

##### Authorized Users
Authorized users have access to two additional functions: `sellGemNoFee` and `buyGemNoFee`, which allow them to execute swaps without paying additional PSM fees. Authorized users will still need to pay the gas fees for their transactions. Governance must add an authorized user to an access list on the LitePSM-USDC to allow them access to these additional functions.

`sellGemNoFee` and `buyGemNoFee` accept the same inputs and return the same values as `sellGem` and `buyGem`, respectively.

#### Maximum Swap Size

All users, both public and authorized, can only swap up to the DAI and USDC balances held by LitePSM-USDC. DAI balance is held by LitePSM-USDC in its own contract address. USDC balance is held in a separate Pocket contract whose address can be read from `litepsm.pocket()`. Please note that other LitePSM-USDC swap transactions included in a block could affect the available DAI and USDC amounts.

The USDC balance held by LitePSM-USDC is determined by external usage and periodic liquidity management by MakerDAO ecosystem actors.

The DAI balance held by LitePSM-USDC is determined by internal protocol bookkeeping activities. The maximum DAI balance held by LitePSM-USDC at any time is dictated by the `buf` value set by MakerDAO governance. MakerDAO keepers periodically execute a set of public functions: `fill`, `trim`, and `chug` to keep the DAI balance of the LitePSM-USDC in line with the `buf` parameter. These functions are not restricted, and any address can execute them.

The Maximum Swap Size limit restricts a single sellGem transaction. As integrators, you can handle swaps beyond this limit by constructing an atomic batch of transactions. This batch can interleave any number of `psm.sellGem()` transactions to swap up to the currently available DAI balance with `psm.fill()` transactions to refill the DAI balance in the LitePSM. This approach allows you to complete a large USDC to DAI swap transaction atomically for your users.

#### Fees

##### Public
The `tin` fee is assessed on all `sellGem` transactions, and the `tout` fee is assessed on all `buyGem` transactions. Both `tin` and `tout` values are set by MakerDAO governance.

Governance can set either `tin` or `tout` to the value of `type(uint256).max`, halting `sellGem` and `buyGem` transactions respectively on the LitePSM. Transactions would be halted for both public and authorized users.

Fees are represented as fixed decimal-point numbers with 18 decimals. Fee values will always be equal to or less than a `WAD`, which is \(10^{18}\). Some examples are:

- A `tin` value of 1, represented as a WAD, would assess a 100% fee on a `sellGem` transaction. This should never happen in practice.
- A `tin` value of 0.01, represented as WAD/100, would assess a fee of 1% (100 basis points) on a `sellGem` transaction.
- A `tout` value of 0.001, represented as WAD/10000, would assess a fee of 0.01% (1 basis point) on a `buyGem` transaction.

##### Authorized Users

Authorized users are not assessed the `tin` and `tout` fees when they execute the `sellGemNoFee` and `buyGemNoFee` functions. However, they will be assessed fees like public users when they execute the regular `sellGem` and `buyGem` functions instead of the NoFee variants.

Authorized users can check their authorization status with the `bud()` function.

The `bud` function accepts the address of the authorized user. It returns a value of `1` when the address is authorized to execute both `sellGemNoFee` and `buyGemNoFee`, and a value of `0` when the address is not authorized to execute these functions.

#### Gas Costs

| Transaction Type | Gas Limit | USD Cost* |
| -------- | -------- | -------- |
| BuyGem (DAI to USDC) Current PSM | 145,030 | - |
| BuyGem (DAI to USDC ) LitePSM - Public User | 78,867 | - |
| BuyGem (DAI to USDC ) LitePSM - Authorized User | - | - |
| SellGem (USDC to DAI) Current PSM | 284,620 | - |
| SellGem (USDC to DAI) LitePSM - Public User | 93,742 | - |
| SellGem (USDC to DAI) LitePSM - Authorized User | - | - |
| Uniswap Trade | - | - |
| ERC20 Transfer | - | - |

*\* Assumes ETH-USD @ 3500 USD and 10 gwei.*

#### Authorized Users

Please reach out to the [Integrations team](mailto:[e-mail]) to discuss your use case and inquire about becoming an authorized user.

#### Stats

Please refer to makerburn.com for current LitePSM-USDC stats after launch.

### Summary

### Troubleshooting

#### Potential Issues

* Swaps will fail if the LitePSM has zero DAI balance.
* Swaps will fail if other transactions have consumed the DAI balance of the LitePSM in the same block before your transaction.
* LitePSM offers no slippage protection, and fees could change within the same block if a pending governance action goes live in a transaction before yours.

#### Refill Dai Buffer

Steps to refill the DAI Balance of LitePSM-USDC:

1. Call the `rush` function to check whether the DAI balance of LitePSM-USDC can be increased.
2. If `rush` returns a value greater than zero, you can execute `fill` to increase the DAI balance of LitePSM-USDC up to the limit set by the `buf` parameter.

#### LitePSM Halt Status

- You can check whether `sellGem` and `sellGemNoFee` are halted by verifying if the `tin` value is set to `uint.max`.
- You can check whether `buyGem` and `buyGemNoFee` are halted by verifying if the `tout` value is set to `uint.max`.

### Next steps
N/A

### Resources
- [Codebase](https://github.com/makerdao/dss-lite-psm/tree/feat/initial-implementation)
- [Technical Docs and Architecture](https://github.com/makerdao/dss-lite-psm/blob/feat/initial-implementation/README.md)