MakerDAO CEO: DeFi market still has these shortcomings

Text | Carol Editor | Bi Yi Tong Source | PANews

Since the second half of last year, DeFi has undoubtedly been one of the focuses of the industry. Many people think that DeFi is the best application of Ethereum smart contract, even the best landing scene of blockchain. Currently, the DeFi-like DApp has surpassed the game and has become the dominant type in the Ethereum DApp ecosystem. In DeFi's "Troika", lending products provide a more direct and powerful driving force for the development of DeFi than decentralized exchanges and stable currencies.

Throughout the market structure of Ethereum's lending products, Maker has become the "central bank" in Ethereum, providing ordinary users with discounted Da window, while other loan products such as Compound are equivalent to commercial banks, Dai by tier 2 borrowing Maker. . Maker's market position determines that its every move will fully affect the direction of the entire lending market.

At the 5th Ethereum Developers Conference (Devcon5) held this month, Rune Christensen, CEO of Maker Foundation and co-founder of Maker DAO, announced that Maker DAO will be on the line to mortgage Dai on November 18. The new system will bring two new features, namely DSR (Dai Savings Rate) and diversified collateral.

In an interview with PANews, Rune Christensen revealed that DSR is a risk-free return for all Dai holders, based on the stability fee paid by CDP holders. After the official launch, other platforms such as Compound can also integrate DSR and benefit from DAI in the pool of pledge funds. Accessing diversified collateral is a small step in Maker's gradual inclusion of real-world assets. Rune Christensen emphasizes that Maker's goal is to access real-world assets such as commodities, bonds, real estate and stocks, ultimately serving the world. The population of the bank account.

“For decentralized stable coins, the key to scaling stability is the diversification of mortgage assets.” Rune Christensen believes that Maker’s choice of collateral is always based on the risk that the asset itself will pose to the entire system, rather than Who is or if you need KYC. In his view, there are still some shortcomings in the current DeFi market. One is that collateral lacks real-world assets, and the other is that DeFi lacks a source of value.

The process of filling the gap must be accompanied by the development of the DeFi market. In the process of development, it is crucial to let more people and DeFi contact. In this regard, Rune Christensen believes that giving users a free trial of the product can bring a huge boost.

The following is an interview with PANews and Rune:

PANews : What do you think of Devcon this year ? Anything about Devcon 's content would like to share with us?

Rune : Overall, I am particularly happy to see that DeFi has become the focus of the Ethereum field, where almost all projects and teams are developing or learning DeFi.

PANews : The value of MakerDAO 's lock position is greatly affected by the price of BTC and ETH . Even if accessing multi-collateral assets, considering the current weight of BTC and ETH in the entire cryptocurrency market, how much do you expect the new system MCD will break? This effect?

Rune : Maker's goal is to gradually include real-world assets such as commodities, bonds, real estate, and stocks, all of which are completely unrelated to cryptocurrencies. In this way, we can not only obtain the stable benefits of cryptocurrency and its unique features, but also diversify the assets of the real world.

PANews : Single mortgage Dai can withstand a sudden drop of more than 80% , but the shock of the small currency is much larger than that of ETH . After the multi-mortgage Dai is online, how do you think about the system's ability to withstand risks?

Rune : In multi-mortgage Dai, each mortgage asset has its own unique set of risk parameters. Therefore, this means that higher risk assets will require more collateral and must pay a higher stabilizing fee, while safer assets will have lower collateral and lower stability fees.

PANews : Multi-mortgage Dai will provide a lot of new features. Can you talk about the new Dai Deposit Rate (DSR) feature? What is the source of revenue for DSR ?

Rune : The Dai Savings Rate (DSR) is a risk-free return paid to all Dai holders who activate this feature. The cash flow from the payment of the DSR comes directly from the stability fee paid by the CDP holder. Therefore, the DSR expenditure is always lower than the average stable cost obtained by the system.

PANews : The interest rate difference between the various lending platforms allows users to arbitrage. The interest rate difference between Maker and other secondary lending platforms has been reduced, and the arbitrage space has been reduced . If the arbitrage space continues to decrease after the online DSR , Maker and Will the relationship between other lending platforms become exclusive?

Rune : I don't think so. DSR is essentially different from platforms like Compound because it's risk free and always available. This means that platforms such as Compound can actually integrate DSR on top of the products they already offer, so that Dai, which is in a locked state, can also pay off. Therefore, I think DSR will only further increase the value of DeFi.

PANews : DeFi loan products have always been over-collateralized. There are views that this mechanism reduces asset utilization efficiency. How do you view this issue?

Rune : All loans are always over-collateralized, and even so-called unsecured loans require the borrower's claims (in legal or other form) as collateral. The problem is the extent of overcollateralization. For example, under today's foreign exchange margin system, if you allow 101% of the mortgage, you can get 100 times leverage. (Translator's Note: equivalent to 100% leverage, can only bear 1% of the fluctuation of the principal).

PANews : Before the Maker DAO community was discussing whether the tokens hosted by traditional financial institutions and required KYC programs should be included in the system as a collateral for Dai , what do you think of yourself?

Rune : For decentralized stable coins, the key to expanding stability is the diversification of mortgage assets. I don't think there is any essential reason to accept assets such as KYC as collateral. The question about mortgages is always the risk that such assets will pose to the entire system. Crucially, Maker can always resist a major crash in a single or a group of assets, regardless of the asset.

PANews : DeFi is bound to connect with traditional assets in order to expand the market . What plans does MakerDAO have in this regard?

Rune : Yes, this is the focus of the multi-mortgage Dai system. Access to real-world assets such as real estate, commodities and securities is critical to expanding Dai's size to trillions of dollars, when Dai can serve all people in the world who don't have a bank account and is a huge DeFi ecosystem. The system provides power.

PANews : Although the concept of DeFi is very popular this year, it has indeed become the most popular category in the Ethereum DApp ecosystem. However , the new user and user activity of DeFi products to Ethereum is still limited. You think that Maker may break through the ether in the future. Is the ecological ceiling?

Rune : Yes. I think that DeFi still has two shortcomings. One is that mortgage assets lack real-world assets, and the other is that DeFi lacks a source of value and synthetic assets that can make DeFi more relevant to ordinary people. Given the impact of these two factors on DeFi, I think we can expand the market adaptability of our products, especially for developing countries that do not have banking.

PANews : Laxin has always been a problem that plagues blockchain projects. On July 26th , the DAI event launched by CoinbaseEarn has promoted the creation of more than 14,000 CDPs , bringing a lot of new users to Maker DAO . What kind of experience do you have to share in the new aspect? Are users in China and the US still the top two user groups?

Rune : We found out from the Earn Dai event that it is more valuable to give users a free trial than to spend money on advertising. We will continue to explore new and innovative ways to acquire users. In addition, China and the United States are indeed the two largest communities.