The vote for Multi-Collateral Dai is now active

MakerDAO just announced on Twitter that MKR holders can vote for the activation of Multi-Collateral Dai. If the vote is passed, Multi-Collateral Dai will be released no later than Monday, November 18th.

Maker’s utility token, MRK is a bit harder to come across than DAI, but holders of it determine a variety of Dai’s parameters. MKR holders vote for the stability fee, savings rate, debt ceiling and now they are voting what is essentially a hard fork of traditional Dai.

MakerDAO has been very confident that the vote will pass, with Founder Rune Christensen saying that it “will” be activated on the 18th. The team does not talk about the vote as often as they talk about when it will be implemented.

MKR holders have a bad record of participating in votes, and in the past there have been circumstances where one voter determined the entire outcome of the stability fee.

The Ethereum core developers don’t allow holders to vote because they believe that people most active in the community should determine the future of the network. MKR is difficult to get, at least in the U.S., so the learning curve to acquire it acts as a way to filter casual users out of the voting process for Dai.

Currently, Dai is only backed by Ethereum, but once Multi-Collateral Dai is implemented, Maker will be able to back it with coins such as BAT, REP and 0x. Christensen has even talked about collateralizing Dai with real world assets, but it doesn’t seem like they plan to do that anytime soon.

If the vote is passed, all holders of Dai and users in collateralized debt positions with Maker will have to manually convert their (now-called) Sai to (MCD) Dai. You can find out how to do that here.

Dai Savings Rate will be as important as Multi-Collateral Dai

Dai is one of the most important innovations in the DeFi ecosystem, so it’s no surprise that the second iteration has garnered a lot of attention. Most people are talking about how exciting Multi-Collateral Dai is, but even the creator of Dai says that the really exciting thing will be the Dai Savings Rate.

“At launch, the exciting thing really is the DSR, right, that really is going to be the big game changer, because it will make it just more easier to manage the system and keep it growing even as dynamics change.” Rune Christensen, MakerDAO

How the Dai Savings Rate works

If you know about Dai, you know that there is a stability fee. Maker’s governance increases the fee as Dai goes over the $1 in order to cut demand. The savings rate acts inversely, increasing as the peg goes under $1 which helps increase demand.

“The stability fee really just tamps down on demand but really what you need is to attract supply, you need monetary policy to pull both the levers of supply and demand” “we probably wouldn’t have the crazy upswings and stability fee up to 20% if they were just able to pull that lever for the stability fee and get some more lenders in there.” – Kyle Kistner, Co-founder bZx

Theoretically, this will give Maker more control over the price of Dai. There will be one oracle, voted in by governance who can change the savings rate whenever necessary. They will only be able to change it within a range voted in by the governance.

The DSR will be funded by the stability fee, so it will always be a certain percentage lower than what they borrowers are paying.

It doesn’t work well without Multi-Collateral Dai

Christensen said that DSR is the most exciting part of the upgrade, but it can’t work well without Multi-Collateral Dai. They are looking trying to accomplish a low risk – low reward or medium risk – medium reward model, and Dai being backed only by Eth creates higher risk.

“That is also where multiple collateral types become important because if you want to provide an attractive DSR that is asking as this risk free base level, you need to be able to consistently attract a large amount of users at the supply level that can collateralize.” – Rune Christensen, MakerDAO

Still if users want to take on a bit more risk, Lending platforms should be able to implement the Dai Savings Rate on their backend. This would combine the DSR with the risk of throwing your money into a lending pool, allowing for higher interest rates for lenders.

MakerDAO founder says DeFi driving the price of Ethereum isn’t a good thing

Investors might look at DeFi’s growth as a reason to expect Ethereum’s price to rise, but MakerDAO’s founder says that entire worldview is just wrong.

During a DeFi Nation conference call yesterday, Rune Christensen clarified his philosophy behind how DAI impacts the value of Ethereum.

“if you think that a stablecoin should drive the price of Eth, then you’re thinking about it the wrong way. Eth needs to inherently have that value and Dai can draw the stability out of it.”

Christensen acknowledges that DAI could increase Eth’s price in the short term 

Decentralized finance has contributed tangible products and growth to the Ethereum network. In comparison to Ethereum based video games, collectables and social networks, DeFi has proven to be useful to anyone who owns money, and garnered the interest of even institutional minds in 2019.

Crypto Chico’s video is an example of retail traders interpreting DeFi as a catalyst for price movement. Christensen seemed to acknowledge the potential of DAI’s impact on the price of Eth, but only in the short term.

“if you try to do it the other way (grow Eth through DeFi), it’s like you’re putting the cart before the horse. sure its gonna be fun on the way up because you can really pump a lot of value into Eth. The problem is once things start going down, it will have the opposite effect. You will have Dai totally destroying the price of Eth as you get this liquidation cascade.”

Christensen views people who think that DeFi will only be used on Eth similarly to Bitcoin maximalists. He says that it is impossible to scale a singularly collateralized stablecoin.

In the long run, it’s about Ethereum’s transactions

MakerDAO ultimately wants to provide services to as many users as possible. Multi-Collateral Dai will allow 7 new ERC-20 tokens to collateralize for DAI, but Christensen is open to adding real world assets in the future.

“Eth’s value comes from proof of stake, staking and earning the fees. the value of eth comes from the transactions happening on the blockchain, not from it getting pumped up by defi. Having real world assets (coming into Eth) will be really beneficial.”

Christensen says that backing DAI with centralized assets will fuel Ethereum as it creates more transactions on the chain, as will the seven new decentralized assets.

Watch the full conversation here:

 

When Multi-Collateral DAI releases, watch SAI die on this site

Mariano Conti, Head of Smart Contracts at the MakerDAO Foundation announced a new site called Sai Sats today on twitter. The site acts as a live feed for information such as Sai supply, the debt ceiling, Ethereum locked and the Collateralization Ratio.

In eight days, Multi-Collateral DAI will release which Maker recommends everyone upgrade to immediately. Being able to see SAI supply drop in real could have an influence on the immediacy users feel about upgrading.

Either way, it’s nice too have a page reminiscent of the U.S. Debt Clock for everyone’s favorite decentralized stablecoin. Conti confirmed with Cryptocult that a similar site with statistics for Multi-Collateral DAI will be available on or shortly after its release.

“Don’t know if I’ll have it ready for release, but it’ll be close!” – @nanexcool

A lot is happening in the Maker world in the upcoming weeks. MCD will be voted on November 15th, implemented on the 18th, and listed on Coinbase shortly after. All holders and people with CDP positions will be responsible for upgrading their SAI (DAI) to DAI (MCD) or risk losing stability on their asset.

If adoption doesn’t happen quickly, users will be able to see it in live time on the SAI stats website.

 

Multi-Collateral DAI will be listed on Coinbase within weeks of release

Cryptocult just confirmed with Coulter Mulligan, Head of Marketing at MakerDAO that the Multi-Collateral iteration of DAI will be listed on Coinbase within 1 to 3 weeks of its release.

“Unsure of the exact date but they plan on adding Dai (MCD) in first 1-3 weeks so either the change will happen Nov 18 or shortly after.” – Coulter Mulligan

When MCD is released, it will be called DAI and the old, single-collateral DAI will be called SAI. According to Coulter, the current DAI will change to SAI either once MCD is listed or when it is released.

It will be important for current SAI holders who don’t keep up with Maker announcements to realize that they are holding a stablecoin that could soon be subject to volatility. A good way to do this is through Coinbase notifications and users realizing that their stablecoin now has a different name.

There is a DAI-ETH pair on Coinbase pro that has decent trading volume, but those people will have to pull their DAI into a Ethereum wallet in order to upgrade to MCD.

If you hold any $Dai today, either in a wallet, CDP or on an exchange, you must upgrade when MCD is released.” – @makerdao