Title: MakerDAO’s Endgame Plan: A Balancing Act Between Decentralization and Stability
Introduction:
Stablecoins face a trilemma in their design, as they must balance decentralization, stability, and scalability. Fully decentralized stablecoins often sacrifice price stability as they rely on market supply and demand to determine prices. On the other hand, stablecoins that prioritize stability often rely on centralized asset backing, such as USD reserves, which compromises their decentralization. The issue of scalability involves expanding user adoption and use cases while maintaining decentralization and stability. To address these challenges, MakerDAO has introduced its Endgame plan, which aims to find a balance between decentralization and practicality by launching two new stablecoins, PureDai and NewStable.
NewStable: Combining RWA as Collateral for Enhanced Stability and Yield
NewStable is a novel stablecoin introduced by MakerDAO as part of its Endgame plan. It aims to tackle the balance between decentralization, stability, and scalability. Unlike DAI, NewStable focuses on growth, yield, and resilience. It combines Real-World Assets (RWA) to provide additional stability and yield while maintaining a USD peg. Additionally, it introduces a freezing mechanism to enhance security and compliance.
NewStable offers a stablecoin option with enhanced stability and security supported by RWAs, such as real estate. These RWAs not only provide additional sources of yield and stability but also increase security through the freezing mechanism when necessary. Furthermore, NewStable is designed to be upgradable through governance voting, allowing for the addition of industry-standard freezing mechanisms, which are commonly used in other major RWA-backed stablecoins to comply with legal requirements in various jurisdictions, thus providing higher security and stability on a global scale.
Existing Dai users can seamlessly upgrade to NewStable, ensuring their interests are protected while attracting new users. Dai will continue to be pegged to the USD 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 earnings will primarily be achieved through NewStable. Additionally, Dai will continue to serve as the liquidity backend for NewStable, ensuring a smooth user experience and improving flexibility and convenience through instant 1:1 conversion.
With the launch of NewStable, a new governance token called NewGovToken will be introduced to enhance MakerDAO’s governance process and participation. Holders can earn rewards by participating in governance and locking tokens, incentivizing long-term engagement. To improve scalability, MakerDAO will introduce NewBridge, a new Layer 2 solution that connects all MakerDAO ecosystem tokens. NewBridge will reduce transaction costs, improve user experience, and facilitate cross-chain compatibility, enabling NewStable to better integrate into a wide range of blockchain ecosystems.
PureDai: Using stETH as Collateral, Decoupled from USD
PureDai is a fully decentralized stablecoin introduced by MakerDAO in its Endgame plan. Unlike Dai, which includes centralized assets like USDC, PureDai excludes these assets and only utilizes ETH and ETH staked through Lido (stETH) as collateral, with a freely floating target price instead of a direct USD peg. This design aims to enhance decentralization and flexibility, meeting the needs of users who prioritize these principles and ensuring resistance to manipulation by a single entity.
To avoid reliance on centralized data sources, PureDai obtains price information through decentralized oracles. Additionally, PureDai employs minimal governance and a simple token economy to incentivize long-term holding and promote supply-side growth. Holders can earn rewards by participating in governance and locking tokens, further enhancing the system’s decentralization and community involvement.
The primary source of revenue for PureDai comes from interest income generated by collateralizing ETH and stETH. These revenues support the stablecoin’s value and provide stability and resilience during market fluctuations. PureDai is expected to launch in the coming years and will operate on the Ethereum mainnet. Once launched, PureDai will be immutable and will not require further upgrades or modifications.
Conclusion:
PureDai represents MakerDAO’s return to its decentralized roots, while NewStable provides assurance for widespread adoption and compliance. With this dual-track strategy, MakerDAO can meet the diverse needs of different users. The transition from Dai to PureDai and NewStable will be gradual, and as users gradually migrate to the new stablecoins, Dai will eventually be phased out.
