He thinks that the only solution in order to meet the demand for $DAI without transforming Maker DAO into a regulated bank is to let $DAI peg free-floating.
Maker DAO is a peer-to-peer organization that enables the generation of $DAI, the leading decentralization stablecoin. Maker DAO has started one year ago to adopt Real-World Assets in order to further thrive the adoption of $DAI and help it to reach a global scale. The Maker DAO’s stablecoin can be minted only against $ETH collateral.
The vision of Maker DAO Co-Founder
Rune expressed his worries regarding the risks associated with providing $DAI loans against Risk-weighted assets(RWA).
He stated that the main reason for what he considered the risk of RWA is justifiable until now is that “any attempt to seize RWA or crack down on crypto’s weak points, such as blacklists or collateral freezes, would be telegraphed in advance in order to allow innocent and legitimate users time to respond.”
However, the recent Tornado Cash events changed his view on that matter.
As a result, his opinion is that the only way to keep $DAI decentralized without exposing it to regulation risks is to limit the RWA exposure at 25%. But considering that the demand for $DAI may not be able to meet by minting it only against $ETH collateral, the only path to achieve this goal is to allow its price to free float.
“The only way to (…) prevent the peg from breaking – which can break the entire system if the faith is lost that Maker Governance will take action to protect the peg – is to introduce a negative Target Rate, that would cause the price of Dai to free float away from 1 USD to a lower exchange rate,” wrote Rune.
He believes that two tools that can make free-floating $DAI “a success” are MetaDAOs and Protocol Owned Vault.
MetaDAOs are essentially subsections of MakerDAO, each of them having a certain goal. MetaDAOs would issue their tokens which can be used for $DAI yield farming in order to create new use cases for it.
The second strategy consists in having Maker itself accumulate large amounts of staked $ETH and use them to issue $DAI and release them in circulation.
The Maker DAO community is currently divided, a significant part thinking that $DAI can’t reach a global scale without a dollar peg.