Rune Christensen, founder of MakerDAO, announced on Twitter that a major upgrade of the DAI stablecoin will be carried out. In the future, its ecological landscape will have two stablecoins, NewStable (name undecided) to meet regulatory requirements and NewStable (name undecided) for the concept of decentralization. PureDai (name yet to be determined).
This article is compiled and compiled by Lianxin. If you have any questions, please refer to the original text.
The paradox of stablecoins
Rune said that from the moment Dai began to expand, it straddled two worlds - the cryptographic world and the real world. The former is an ecology that advocates the concept of decentralization, and the latter is a new opportunity to combine the traditional financial fields.
Recommended reading: MakerDAO will invest 500 million DAI into U.S. Treasury bonds and corporate bonds: purpose and content Recommended reason: This article tells the story of MakerDAO’s decision to invest in purchasing RWA and the thinking behind it, which can provide a clearer understanding of the reserves behind Dai and the real world Asset-linked trade-offs.
But these two worlds are essentially in conflict with each other. If stablecoins are to be pegged to the U.S. dollar and remain purely decentralized, it is impossible to usher in large-scale development.
The biggest problem with the current scale of DAI stablecoin is that in order to embrace the concept of decentralization, it is not easy to make breakthroughs in compliance. If you want to provide profits through RWA, you have to make more compliance efforts. But the nature of the token cannot meet the requirements.
Rune believes that there are two main ways to resolve the contradictions of this stable currency:
Pegged to the U.S. dollar and combined with real-world assets
In order to prioritize utility and scale, choosing to be pegged to the US dollar and combined with real-world assets can quickly increase the scale of the ecosystem. This requires integration with traditional finance (TradFi) and consistency with regulatory and other requirements.
(Real world assets are reality! MakerDAO paid $1.5 million in taxes to Switzerland)
In fact, everyone sees this very clearly. It is almost impossible to find a mainstream DeFi project that does not make this trade-off. For example, Aave launched RWA lending service. This is especially true for stablecoin projects. For example, USDC issuer Circel regularly releases audit reports and can freeze suspicious cash flows at any time.
Pursue the pure concept of decentralization
The other way is to go purely decentralized, but this requires an architecture and design that is completely independent of centralized control, and a clearing mechanism that strictly relies on decentralized collateral. Therefore, if you want to achieve a high degree of decentralization, it is impossible to be linked to the real society or even DAO.
(MakerDAO explodes again! Traditional financial risks spread to the Defi world through RWA)
Therefore, the traditional view is that a completely decentralized stablecoin is very difficult to achieve. But in fact, this type of stablecoin seems to still have a stable user group, and there is a demand for decentralized stablecoins.
Maker decided to go two ways at once
Rune said that Maker will decide not to make a choice and try both paths, but it will not impose two conflicting concepts on one stablecoin, but create two stablecoins to perform their own duties.
In the future, Maker will launch two stable coins based on DAI:
NewStable: To comply with regulatory requirements
PureDai: In pursuit of the concept of decentralization
As a stablecoin update of Maker’s The Endgame Plan, Dai will be able to better achieve its goals, reduce various compromises, and better meet the needs of users by completely separating the two conflicting token economies and designs. the needs of two types of customer groups.
NewStable: Born for supervision
The team regards NewStable (name yet to be determined) as the main successor of Dai, and will use this token to focus on ecological growth, scale and most importantly - complying with regulatory requirements. NewStable’s focus is on increasing the utility and adoption of stablecoins, and all of its features are tailored toward this goal.
Rune said that NewStable is still a decentralized stablecoin, and it can make the protocol design as flexible and transparent as possible through governance.
NewStable will integrate existing traditional financial services
NewStable will take over Dai's current integration of RWA and traditional finance-related businesses and continue to optimize it, allowing it to change settings as the environment changes through a decentralized governance process. Maintain flexibility and face the vast traditional market.
After a transition period of approximately one year, Dai’s savings rates (DSR) will begin to be gradually closed, and the final proceeds will be distributed only to NewStable.
NewStable will continue to be governed by MakerDAO.
NewStable has the function of freezing transfers
In order to ensure that NewStable can expand to a global scale more smoothly, a "transfer freezing function" will be introduced over time to comply with the regulatory requirements of various governments. For example, USDT and USDC will now use the freezing function to block suspicious cash flows under government requirements.
However, the freezing function will not be launched immediately, but a module that needs to be handed over for management before it can be turned on. Official implementation could be months or even years away, depending on NewStable's growth.
The original Dai stablecoin will maintain its status quo. Since its ERC-20 implementation technology does not have a backdoor contract, it is impossible to modify it and add a freezing function.
PureDai: Born for decentralization
Maker’s other stablecoin is PureDai (name yet to be determined)
PureDai improves the decentralization of the clearing mechanism
In the future, Dai holders can choose to upgrade Dai to PureDai, which Rune believes is a return to decentralized ideology. PureDai will only have purely decentralized collateral such as ETH and stETH, without more centralized assets such as USDC.
In addition, PureDai has a freely floating benchmark price (not necessarily against the US dollar), coupled with the most decentralized oracle, and this mechanism will never be modified by any organization, including MakerDAO.
PureDai will be completely uncontrolled by MakerDAO
In order to minimize PureDai's legal compliance risks and meet the concepts of censorship resistance and decentralization, PureDai will be released in the form of a final immutable contract after launch.
After being released from PureDai, the contract does not need to and cannot be further upgraded or changed, and is completely independent of Maker's control (and does not need to be). Once the contract is activated, PureDai will have no relationship with Maker.
Therefore, the contract setting of PureDai is very important, and Rune believes that it will take at least a few years to launch.
PureDai will only be issued on Ethereum
In addition, PureDai will only be deployed on the Ethereum mainnet, but it is expected that some Layer2 and cross-chain bridges may choose to support it and cross-chain it to other blockchain networks.
What does the user need to do?
Existing Dai holders will be able to upgrade to either of these two options. Or if you have doubts, you can continue to hold Dai. In addition, Dai, NewStable, and PureDai can be upgraded at any time using a one-to-one exchange method.
NewStable and PureDai can be converted to Dai at any time
Dai holders will be able to upgrade after NewStable is launched, but they can also choose to continue using Dai. The latter will maintain the status quo and will continue to be pegged to the US dollar. NewStable can even be reversed back to Dai at any time according to the user's wishes. . The same goes for PureDai.
However, as most users and applications have completed the migration to NewStable or PureDai, it is expected that Dai will be completely abandoned. When this happens will depend on how quickly the ecosystem adopts NewStable and PureDai.
There will be more news in the coming weeks.
This article DAI major upgrade, Maker launches two stable coins to meet both regulatory and decentralization needs first appeared on Chain News ABMedia.
