Creating a stable, accessible digital currency requires an ecosystem of solutions that are reliable and trustworthy. This is what makes decentralized finance (DeFi) such an interesting concept. Within the broader landscape of DeFi, protocols bring together different actors to bridge gaps and reduce friction. These protocols make it easier for users to access, spend, or lend their digital assets.
In the event that the crypto market gets wiped out – really, really wiped out – no amount of over-collateralized crypto loans will be able to save MakerDAO’s dollar-pegged stablecoin, DAI. The Maker protocol is one of the largest DeFi protocols on Ethereum, and its death could cause havoc in the DeFi marketplace.
Could DAI also be backed by real-world assets like factories, stocks, and corporate debts?
Diversifying DAI’s backing out of crypto could add tens of millions of dollars to MakerDAO’s revenue and protect DAI from a crypto bear market, according to undercollateralized lending protocols. DAI is already working on securing real-world assets to support its operations.
Maker + Maple
Earlier today, the crypto lending protocol Maple Finance announced plans to partner with MakerDAO in order to issue loans to institutional borrowers. Since its launch 11 months ago, Maple Finance has funded over $1 billion in undercollateralized loans.
In December, 96% of the MakerDAO community backed Maple’s proposal to create a pool to finance MakerDAO loans. These loans will be backed by enforced contracts representing a diversified loan portfolio backed by real assets.
Since November 2020, TrueFi has facilitated $1.3 billion in uncollateralized loans and has launched a signal request for between 50 million and 100 million DAI.
The pool will be used for “diversified lending and credit opportunities,” with an emphasis on “traditional credit opportunities” that have little correlation with the crypto market. TrueFi’s signal request will be open for voting until April 25.
Elon Musk’s electric car company, Tesla, received a $7.8 million loan from MakerDAO earlier this month.
Last month, MakerDAO protocol engineer Hexonaut presented a governance proposal. By embracing real-world assets, Hexonaut hopes to spur DAI’s growth and boost MakerDAO’s languishing MKR token. With a total value locked (TVL) of $14.3B, MakerDAO is still the fourth-largest DeFi protocol, however DAI has fallen behind Terra’s UST stablecoin in terms of market capitalization. Terra leader Do Kwon is only interested in killing his rival. In a tweet last month, he declared, “I will kill $DAI with my hand.”
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