Issuance of DAI Stablecoins & Integration of Real-World Assets (RWAs) at MakerDAO | Hexonaut’s March 2022 DeFi Stability Protocol Review

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The MakerDAO system provides stability through the use of a collateralized debt position (CDP) which offers its users immediate liquidity while simultaneously providing them with an option to exit their CDP before it matures. Unpredictable Market Volatility: DAI is designed to be highly responsive, meaning that in times of high volatility, owners will receive additional tokens at no cost.

This adds greater flexibility and can provide the necessary stability for people operating on tight margins or living paycheck-to-paycheck; this feature also makes DAI more useful as a medium of exchange than other cryptocurrencies where exchanges might take place during periods when instability may preclude trading altogether.

Earlier this month, Hexonaut, the protocol engineer at Makerdao and co-founder of the software and design firm Bellwood Studios, announced a proposal to scale the decentralized finance protocol Makerdao by using real world assets. Hexonaut contends that the bull market was good, but “the time is passing”, and he believes Makerdao must “take the next step and begin integrating with the real world.”

Defi Protocol (DEFI) may soon be the new world order

Makerdao has a software engineer who has an idea that could revitalize the decentralized finance protocol (defi).  Makerdao, in its simplest form, is a collateralized debt position (CDP) or protocol that enables the issuance of the stablecoin DAI. According to statistics, there are approximately 31 different CDPs across various blockchains, and Makerdao is the largest in terms of total value locked (TVL). Over the last seven days, Makerdao has gained 6.99% in TVL, bringing its total to $16.15 billion.

With a market valuation of $9.5 billion, Makerdao’s DAI stablecoin is the fifth-largest stablecoin, and the second-largest defi protocol, behind Curve Finance. 

UST, a stablecoin issued on Terra’s network, recently surpassed DAI in valuation, as UST now has a valuation of approximately $15.4 billion. 

Hexonaut, a protocol engineer at Makerdao, revealed an idea that proposes real-world assets (RWAs) as part of Makerdao’s CDP scheme. 

Hexonaut explained that centralized stablecoins such as USDC could be a short-term crutch for the project.

The proposal by Hexonaut emphasizes that crypto-native yields have dried up liquidity, and he wants to diversify the portfolio with uncorrelated, quality loans to restore liquidity.

A proposal for Makerdao governance was also posted that day, with contributions from other contributors, under the title “Aggressive Growth Strategy.” 

Hexonaut mentions in his proposal that he believes RWAs are inevitable in the project. In a two-step plan, Hexonaut proposes raising capital and taking “conservative” risks.

As a number of competitors have focused on bridging RWAs, the developer believes Makerdao is in the right place at the right time to take advantage of RWAs.Hexonaut’s proposal states:

The RWA effort should be kicked into high gear at this point.  The last year has seen a number of on-chain and off-chain protocols emerge to connect RWAs with crypto, as well as our own effort to improve and scale the pool of borrowers we already work with.

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Chris Munch

Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.