A few things you must know before Maker MCD goes live

Source: Chain News ChainNews

Written by: LeftOfCenter

November 18th is an important day for Ethereum and DeFi Ecology. The largest decentralized lending agreement Maker in the DeFi ecosystem is about to usher in the official release of Multi-asset Mortgage Dai (MCD). Multi-asset collateral Dai will not only introduce the highly anticipated Dai deposit rate ( DSR ) , but also more collateral asset types .

This is a significant upgrade. Pan Chao , head of MakerDAO China, told the chain, "The most obvious change in all these functions is that in multi-mortgage Dai, you can not only use Dai to generate Dai, but also use other assets to generate Dai. Multi-mortgage One of Dai’s killers is Dai Deposit Interest ( DSR ), which is equivalent to a US dollar current account, which allows users to keep on the go and has no counterparty risk."

"Dai's deposit interest will become the benchmark interest of the DeFi Ecology, which is equivalent to the impact of the central bank's reserve interest on commercial bank interest." Pan Chao added.

Which assets are selected?

According to MakerDAO official introduction, in addition to ETH, MCD also supports the mortgage privacy browser BAT ( Basic Attention Token ) in order to observe and experiment with multi-asset mortgage effects and risks; in the future, various parameters will be adjusted according to BAT performance. For reference and reference for other collaterals on the follow-up.

The final decision to go online BAT as a collateral option was voted through the community.

In July of this year, the Maker Foundation launched a community vote on collateral selection, adding the following collateral assets to the system's prioritization: Augur ( REP ), Brave (BAT) , DigixDAO ( DGD ), Ethereum ( ETH ), Golem ( GNT ), OmiseGo ( OMG ), 0x ( ZRX ). Eventually in October, the Maker Fund announced that the multi-mortgage Dai ( MCD ) only supports ETH and BAT for the time being because ETH and BAT are the two cryptocurrencies with the best asset quality and liquidity within the optional range.

Collateral for Maker Community Assessment

In fact, BAT, as a utility token for the privacy browser Brav e , has achieved very good growth this year. As of October 17, Brave has 8 million monthly active users and more than 2.8 million daily active users. There are 385 campaigns on the Brave platform, and the platform’s user engagement is high. Compared to the industry average of 2%, Brave’s user click rate is 14%, with 12% of the page staying for 10 seconds or more. For a long time, there were 2.36 million page visits in 10 seconds or more.

In addition, there are more than 290,000 verified publishers on the Brave platform, including 200,000 YouTube creators, 33,000 website publishers or creators, and 15,000 Twitch anchors. This is still the result of the beta version of the exploration period. After accumulating 3 years of power, the Brave browser announced the release of the 1.0 official version on November 13.

What's new in Maker MCD?

The annual interest on the new Dai deposit is 2%. In order to encourage more people to convert Sai into Dai, the rate is likely to increase.

In addition, after the Maker MCD goes live, it will support the payment of the stability fee with Dai, and the previous practice of using MKR to pay the stabilization fee will be abolished. Supporting the payment of a stability fee with Dai can greatly reduce the friction between users borrowing Dai and repaying. By then, MKR will more purely as an equity and governance asset, capturing the value of the entire system.

Since Dai's supply ceiling depends on the value of the back collateral to generate the maximum number of Dais, in the single mortgage phase, due to the high stability of ETH, the highest supply is two-thirds of the Ethereum market value, and the actual situation is still Far less than this number.

With a variety of mortgage guarantees Dai, this amount will be determined by the total market value of the supported collateral and the amount of Dai that can be generated under its risk parameters. As MCD goes online and supports more collateral, Dai's market value is expected to reach hundreds of millions of dollars.

DAI goes to more application scenarios

In order to verify the possibility of MCD, a few months ago, MakerDAO launched several pilot projects in conjunction with the German financial supply chain platform Centrifuge , including companies such as dexFreight, TradeShift and Paperchain , allowing sellers to pass the stable currency Da in the Ethereum blockchain . Settle accounts receivable financing to solve the problem of cash flow shortage.

In October, the logistics platform dexFreight and the financial supply chain exchange platform Centrifuge and Maker Foundation launched a pilot project, which was carried out on the decentralized logistics platform dexFreight, through tokenization of freight invoices, combined with logistics collateral and DeFi Low-cost liquidity available to fill the short-term financing gap for freight companies.

Another pilot project worth mentioning is the collaboration between Centrifuge and music data analysis company Paperchain. In this case, musicians and independent labels pay a fee to receive Spotify revenues that would otherwise be received in half a year. Get ahead of time to make up for the funding gap, which is also an important application scenario in the streaming media music industry chain.

The commonality of these pilot project scenarios is that there is a funding gap, and it is very complicated and difficult to obtain loans from the traditional financial industry. This is what Dai is best at: it is based on no need, no friction, simpler, more open and transparent. The solution meets people's low-cost loan needs.

This is significant for MakerDAO, which means that as a virtual asset, the stable currency Dai can solve practical problems for people's real life in addition to the scenario used to encrypt financial derivatives. It can incorporate traditional real assets into the encryption economy. Come in the system .

Pan Chao told the chain, "A big pain point in the supply chain industry is receivables financing, especially for multinational businesses. We have piloted companies including Centriifuge, dexFreight and TradeShift to allow sellers to block in the Ethereum block. In the chain, through the stable currency Dai, the accounts receivable financing, solve the problem of cash flow shortage, and expand the market to investors around the world."

"If DeFi is to expand into the trillion market, real asset chaining is essential. A simple example is the winding up of major national monetary assets. At present, DeFi's ceiling is due to the lack of assets, but we have seen Many traditional banks have tried to issue hundreds of millions of dollars in corporate bonds on Ethereum, which is a very good signal," Pan Chao said.

MCD online risk geometry?

For the money-holding users, the most important concern is of course the risk. Will there be a potential risk when MCD goes live? Does Makerdao have a corresponding response?

In this regard, Pan Chao told the chain, "We have followed the highest safety standards in the development of MCD, through formal verification and multiple independent audits. The development of blockchain is close to rocket engineering, and each step needs to ensure accuracy and Security. In addition, the system also designed security modules, such as delayed feed and emergency shutdown, to maintain the security of asset holders even in the event of a black swan incident."

Even so, there are concerns about the potential risks of the upcoming MCD launch. Blockchain investor Andrew Kang believes that MKR buying pressure will gradually increase in the process of closing SCD (DAI generated by single-asset mortgage). Andrew Kang appealed that the Makerdao Foundation and the community should propose an exact time to shut down the SCD and implement a mandatory upgrade, taking into account the interests of MKR holders .

In this regard, Pan Chao believes that the MakerDAO Foundation will have an exact time to shut down the SCD, but this time requires more mortgages. After running for a period of time, according to market feedback, it will be notified several months in advance, so that CDP holders can smooth. Exchange the MKR and repay the stable cost of the single mortgage Dai. At the same time, the liquidity of MKR on the market is sufficient for CDP holders to exchange.

Will Maker MCD go online and make MKR prices soar?

When the Maker MCD is about to go online, there is a saying on the market that MCD will push the price of MKR up quickly. Andrew Kang also analyzed this, he believes that the MCD launch does have the potential to drive the purchase of MKR tokens on the market, but this buying power will not happen suddenly .

His specific analysis is as follows :

1) In theory, a large amount of purchases of MKR will occur in a short period of time, and the low liquidity of Uniswap and the centralized exchange may cause prices to squeeze upward.

2) MRK prices have risen by 30% last month as users have such expectations for the upcoming MCD features .

3) However, how likely is this to happen? Does the CDP holder need to purchase MKR? Is it possible for CDP holders not to be MKR investors? And will all purchases be completed in a short time?

4) The following are the top 10 CDP accounts listed by accrued stabilizing fee . From this, we can see that the largest CDP has accumulated a total of $ 750,000 , while the top 10 CDPs totaled $ 2.8 million . It accounts for more than 50% of the total number of CDPs .

5) In addition, all accounts associated with these CDP addresses are also tracked, and the number of MKRs that these CDP owners may hold is checked, and it is found that only 3/10 of these CDPs have a certain number of MKR balances. This is amazing.

6) Of course, there is also the possibility that these CDP owners have other addresses that are not associated with them . However, after checking the previous stabilization fee payment data, it is found that there is no indication that there is an address from a large MKR.

7) In addition, the possibility of holding a large number of MKRs in unrelated wallets is also excluded . Why? Because these owners are either accustomed to making many other ICO investments using these addresses, or using these wallets that existed from the beginning, we found that the assets transferred to major exchanges were limited.

8) All stabilization fees are paid in Dai or MKR and MKR is recently available at Uniswap / Kraken.

9) Considering that each CDP has an accrued stabilization fee and holds MKR, calculate the cost deficit , which refers to the dollar denomination of the MKR that the CDP owner needs to purchase MKR from the secondary market and then destroy. As a result, the top 10 cost deficit was $2.1 million .

10) Interestingly, Uniswap is the most liquid source of MKR, and most OK platforms that trade MKR get liquidity from Uniswap. However, the MKR pool on the Uniswap platform is only $3.6 million deep , so a short-term purchase pressure of $2.1 million may have a significant impact on the pool.

11) Then, the problem is not the accrued expenses, but the time points. When the MCD is officially released, the SCD will not be abolished immediately, but the two will coexist for an indefinite period of time.

12) For CDP holders, there is no incentive to upgrade . The end result is that they will not be actively upgraded immediately, which will result in unnecessary capital needs.

13) With these factors in mind, Andrew Kang predicts that the thrust to purchase MKR will gradually expand without sudden changes.


  • Andrew Kang Tweet: https://twitter.com/Rewkang/status/1195047695313883136