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What Will Be the Future of the DAI Stablecoin and on Whom Does it Depend?

Rune Christensen, co-founder of MakerDAO suggested that the cancellation of the DAI binding from the dollar is the only sure way to…


Rune Christensen, co-founder of MakerDAO suggested that the cancellation of the DAI binding from the dollar is the only sure way to preserve decentralization and continue working. Regarding the situation which DAI is now in, Greg Di Prisco also spoke out devoting a series of tweets to the stablecoin with an analysis of what is happening.

Earlier we wrote about how Tornado Cash sanctions have affected DAI, then the community was concerned that the anti-crisis measures taken by the team could contribute to the loss of the peg to the US dollar. Today we see a situation in which the loss of binding is a necessity for the further work of DAI. MakerDAO co-founder suggests abandoning the concept of a stablecoin.

Concerned that regulators have started to pay more and more attention to DeFi, Rune Christensen proposed a plan that, in his opinion, should make DAI more resistant to attacks from authorities. The key point of this plan was a “floating” DAI.

«The only choice is then to be prepared to limit attack surface through RWA exposure reduction, by having the option of enforcing a maximum relative exposure to RWA — triggering this would likely cause Dai to free float away from USD, at stable, predictable rate that feels like negative interest rates»
Rune Christensen
Rune Christensen. Source: Yahoo Finance

Rune realizes that a floating DAI is quite dangerous and can have consequences. Therefore, he offers two tools that will help ensure efficient operation even after the DAI coin is no longer stable and tied to the dollar:

  • MetaDAO tokens: according to Rune’s idea, this should compensate for the community floating to the dollar DAI. The circulation of MetaDAO tokens should affect the negative rates that will appear as a result of the loss of the dollar peg, as well as the DAI offer.
“Beyond justifying the existence of Dai even if it is free floating, MetaDAO token yield farming can also be used to incentivize generation of decentralized Dai from fully decentralized collateral such as Staked ETH (Or, for maximum value preservation, EtherDai), which helps grow the supply of Dai and reduce the negative rates Dai holders have to accept.”
  • The Protocol Owned Vault: an important tool for floating DAI, because it allows you to control the negative rate and reduces the risks for users.
“Basically, if the rates get low enough Maker can step and in allow the Protocol Owned Vault to take on very high leverage in order to first of all stabilize the rates so they don’t go any lower, but then also just harvest the massive potential for yield that debt with very negative rates have.”

Of course, the news that stable DAI may lose its peg to the dollar in the future did not go unnoticed among the community. The former head of the MakerDAO business development department shared his observations on Twitter.

A large thread with a mission to describe recent events is ironically titled — “Maker Drama”. The narrative begins with Greg Di Prisco talking about the “Maker Community”, which decentralizes decisions on the operation of Maker tokens. However, Greg noticed that the community is divided into three ideological directions, which he named as:

  • “Futurists”, which, in his opinion, is headed by Rune Christensen, who is already known to us.
  • “Centralists” is a group headed, as Greg suggests, by Sebastien Derivaux.
  • “Decentralists, headed by Chris Black.

Rune’s proposal was to untie DAI from the dollar and was well received among futurists and decentralists. This is probably due to the fact that they believe in the bright future of DAI and in the ability of decentralized finance to replace fiat currencies. In this concept, the intervention of regulators in the work of DAI looks like a threat to decentralization.

The centralists did not support the idea of a floating DAI. From Greg’s tweets, it can be understood that they are willing to sacrifice decentralization in order to benefit.

The author of the thread himself does not support any of the directions described above within the MakerDAO community and does not yet know the right way forward for DAI.

Now it is not clear what forces will prevail in the MakerDAO community, and how they could influence the fate of the stable coin. We will be watching what is happening with DAI, and you will share with us your assumptions about what awaits for DAI in the future.