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26 October 2020

Maker DAO’s Embrace of Centralized Stablecoins Offers Risks and Rewards - CoinDesk

Maker DAO’s Embrace of Centralized Stablecoins Offers Risks and Rewards - CoinDesk


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USD coin (USDC) and tether (USDT), the two largest centralized stablecoins, are deployed on public blockchains like Ethereum or Bitcoin’s Omni.

MakerDAO would do so by reducing the reward, or interest rate, that Dai holders enjoy.

By loosening its collateral requirements (it did the same for Paxos Standard and TrueUSD stablecoins), MakerDAO encouraged a massive influx of centralized stablecoin collateral into the system and an efflux of new Dai.

It wasn’t until late-2019 that other collateral assets could be used to fabricate Dai, beginning with Basic Attention Token, the native token for the Brave browser.

Fabrication of Dai could be entirely limited to collateral with few connections to the real world legal system, like Ethereum.

On the other hand, perhaps getting more engaged with the real world, first via stablecoins and next through Real World Assets, is what MakerDAO needs if it is to change the world for the better

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