Original author: hamster
Original source: Substack
Stablecoins face a trilemma in their design, namely the trade-off between decentralization, stability, and scalability. Fully decentralized stablecoins usually need to give up a certain price stability because they do not rely on any centralized asset support, but determine prices through market supply and demand, which may lead to large price fluctuations. Stablecoins that pursue stability often rely on centralized asset support, such as US dollar reserves, which can provide price stability but sacrifices the original intention of decentralization, making these stablecoins more susceptible to regulation and control by centralized institutions.
The scalability issue involves how to expand the user base and usage scenarios while maintaining decentralization and stability. In order to find a balance between these three, many stablecoins have adopted partially centralized or compromised solutions. For example, some stablecoins use US dollar reserves to ensure price stability, but this also means relying on centralized custodians, which to some extent weakens its decentralized nature. In short, how to find the best balance between decentralization, stability, and scalability remains the main challenge in stablecoin design.
MakerDAO’s Endgame Plan
MakerDAO's Endgame plan aims to solve the above dilemma by launching two new stablecoins, PureDai and NewStable. Founder Rune Christensen proposed that the plan attempts to balance the needs of decentralization and practical use by separating different stablecoin paths. PureDai will serve as a fully decentralized stablecoin, while NewStable focuses on growth and earnings.
NewStable: Combine RWA as collateral to provide additional stability and yield
NewStable is a new type of stablecoin launched by MakerDAO in its Endgame plan, which aims to solve the balance between decentralization, stability and scalability. Unlike DAI, NewStable focuses on growth, yield and resilience, provides additional stability and yield by combining RWA, adopts a USD peg, and introduces a freezing function to improve security and compliance.
NewStable provides an RWA (e.g. real estate) backed stablecoin option with enhanced stability and security. These RWAs not only provide an additional source of yield and enhance the stability of the stablecoin, but also provide added security through a freezing function when necessary. In addition, NewStable is designed to be upgradeable, enabling it to add industry-standard freezing functions in the future through governance votes, such functions are commonly used in other major RWA-backed stablecoins to adapt to the legal requirements of jurisdictions, thereby providing greater security and stability at a global scale.
Existing Dai users can seamlessly upgrade to NewStable (this feature will be launched in the near future). This upgrade maintains the freedom of users to convert between Dai and NewStable, ensuring that the interests of existing users are protected while attracting new users. Dai will continue to be pegged to the US dollar and allow users to convert it back to NewStable at any time. During the initial transition period, the Dai Savings Rate (DSR) will be gradually phased out, and future gains will be mainly realized on NewStable. At the same time, Dai will continue to serve as the liquidity backend of NewStable, ensuring a smooth user experience and improving flexibility and convenience through instant 1:1 conversions.
The launch of NewStable is accompanied by a new governance token, NewGovToken, which will be used to enhance MakerDAO's governance process and expand participation. Holders can earn income by participating in governance and locking tokens, incentivizing long-term participation. To improve scalability, MakerDAO will launch NewBridge, a new Layer 2 solution that connects all MakerDAO ecosystem tokens. NewBridge will reduce transaction costs, improve user experience, and promote cross-chain compatibility, allowing NewStable to better integrate into the broad blockchain ecosystem.
PureDai: uses only stETH as collateral and is not pegged to the US dollar
PureDai is a fully decentralized stablecoin launched by MakerDAO in its Endgame plan. Unlike Dai, which includes centralized assets such as USDC, PureDai excludes these assets, uses only ETH and Lido-collateralized ETH (stETH) as collateral, and adopts a free-floating target price instead of being directly pegged to the US dollar. This design aims to increase decentralization and resilience, meet the needs of users who prioritize these principles, and ensure that it is not controlled by a single entity.
In order to avoid dependence on centralized data sources, PureDai obtains price information through decentralized oracles. At the same time, PureDai adopts minimal governance and simple token economics to incentivize users to hold for a long time and promote supply-side growth. Holders can earn income by participating in governance and locking tokens, further enhancing the system's decentralized attributes and community participation.
PureDai's main source of income is interest income obtained by staking ETH and stETH, which is used to support its value and provide stability and resilience in market fluctuations. According to the latest information, PureDai is expected to go online in the next few years and will run on the Ethereum mainnet. After going online, PureDai will be immutable and will not require further upgrades or modifications.
Summarize
PureDai represents MakerDAO's return to decentralization, while NewStable provides guarantees for mass adoption and compliance. Through this dual-track strategy, MakerDAO can meet the needs of different users. Of course, the transition from Dai to PureDai and NewStable will be gradual, and Dai will eventually be phased out as users gradually migrate to new stablecoins.
