DefiDollar is an attempt at being an index of stable coins that uses Defi primitives to stay near the dollar mark and subsidize the collateralization ratio. Since DefiDollar (DUSD) is backed by existing stable coins, for the sake of the illustration, we start with choosing two stable coins, A and B for e.g. Dai and sUSD as the underlying reserves, in an equal ratio. To mint 200 DUSD, the user deposits 100 coins each of A and B. Within the mint transaction, A and B are locked in Aave, and the corresponding interest-bearing Aave coins aA and aB are deposited in a liquidity (balancer) pool. Interest income from Aave is redirected to an earnings pool. aA and aB in the pool can be traded using an Automated Market Maker mechanism (a pool-based swap mechanism used by Uniswap and curve.fi and for which balancer provides a framework).