Governance Roundup: What DeFi protocol communities are discussing and debating

Quick Take

  • In addition to major feature launches, many protocols have minor parameter decisions (e.g. changing interest rates in MakerDAO) that must be made by token holders
  • Most of the governance happens on forums, where users submit proposals and ideas, and community members give their feedback
  • The first layer of voting is typically informal to gauge interest, and then proposals are moved to token holder voting (or execution via a multi-signature signers)

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MakerDAO just listed several new collateral options

With the rise of a new generation of popular crypto projects, MakerDAO decided to respond to the community request and add new options that can be used as collateral. The project listed three new coins, including Compound, Chainlink, and Loopring.

The mentioned three tokens were specifically voted for by the MakerDAO community, which wanted some new alternatives for using as collateral for generating DAI stablecoins. The project responded by adding support for LINK, COMP, and LRC deposits.

The proposal to list said coins originally emerged earlier this year, during the summer. However, voting itself only took place earlier this week.

Why is MakerDAO listing new collateral options?

With the new listings, MakerDAO has listed a total of 11 new DAI vault pairs in 2020 alone. Other cryptos that received support this year include USDT, MANA, PAX, wBTC, KNC, ZRX, TUSD, and USDC.

However, while these tokens were listed partially to provide users with more options, they were also meant to inspire collateralizing more DAI in order to take its price down, as it managed to lose its $1 peg at one point.

The peg instability came to be right as the decentralized finance sector saw a massive surge in yield farming. Meanwhile, Maker’s community believed that lowering the collateralization requirements for the main vault (the USDC vault) would result in a greater amount of DAI reaching the market. USDC is also the most popular of all DAI collateralization options, and there are currently 372 million USDC coins locked within the project’s vaults.

It would appear that the community had the right idea, as DAI price did drop all the way back to $1.01 since the proposal was implemented. With the desire to keep DAI price steady, the project’s founder, Rune Christensen, believes that listing more coins as collateral is the right, and the only way to go.

The post MakerDAO just listed several new collateral options appeared first on Invezz.

No Compensation for MakerDAO Vault Owners After Governance Vote

MakerDAO vault holders who lost about $2.5 million during Black Thursday will not receive any compensation following a governance vote that ended on Tuesday. While decentralized finance (DeFi) continues to garner attention, issues like the type suffered by the MakerDAO project earlier in the year continue to plague the market as a whole.

MKR Holders Vote Against Compensating Affected Vault Owners

Following the conclusion of voting on the revised MakerDAO governance poll, vault owners affected during the Black Thursday crash of mid-March will not receive any compensation. This outcome is due to the fact that 65% of the participants voted against compensating the $2.5 million losses incurred by vault owners.

Some reactions to the news on social media say the decision to not compensate vault owners sets a not so ideal precedent. With Maker (MKR) token holders unaffected by the forced liquidations of March 12, 2020, it appears only vault owners were the real losers.

Amid the Black Thursday panic, the crypto arena saw a massive sell-off of tokens leading to a sharp decline in price across the market. The situation mirrored the events seen in the larger investment scene as fear over the coronavirus pandemic saw investors electing to liquidate their assets for cash.

A Black Swan Event

For the MakerDAO project, Black Thursday turned out to be a ‘black swan’ event. As the price of Ethereum (ETH) fell on that fateful Thursday, the network suffered massive congestion which prevented price oracles from updating ETH/USD price in real-time.

With the price oracles failing, undercollateralized vault owners suffered forced liquidations. Some users took advantage of the situation to launch opportunistic profiteering attacks with zero bid and half bids. These rogue actors were able to liquidate ETH from vault owners with little or no DAI given in collateral.

MakerDAO lost $6.65 million in DAI stablecoin during the incident with $4 million of this shortfall being actual “bad debt” for the project. The DeFi lending project was able to service the bad debt via debt auction a few weeks later.

In the aftermath of the forced liquidations on Black Thursday, some affected vault owners sued the Maker Foundation for not providing adequate information about the risks involved in holding collateralized debt positions (CDP).

The post No Compensation for MakerDAO Vault Owners After Governance Vote appeared first on CryptoPotato.

Aave takes number one slot in total value locked, beats MakerDAO

Decentralized lending and borrowing protocol Aave has taken number one slot in total value locked (TVL), snatching that position from rival MakerDAO.

Aave’s TVL, or the total amount of crypto assets deposited into the protocol for lending and borrowing purposes, is now $1.45 billion, according to tracker DeFi Pulse. MakerDAO’s TVL is a tad lower at $1.44 billion.

Aave is the second project to beat MakerDAO in TVL. On June 20, Compound overtook the DAI stablecoin issuer, with about $500 million in TVL at the time as compared to MakerDAO’s $486 million.

The yield farming craze in recent weeks has shot up the TVL of almost all DeFi protocols, which currently stands at over $6.9 billion. In February, that amount was only $1 billion. As The Block Research previously reported, TVL is not an ideal metric to look at DeFi activity. The Block’s Open Finance Index, which takes into consideration vertical-specific parameters such as decentralized exchange volumes, provides a better picture.

Aave’s number one slot follows an Electronic Money Institution (EMI) license received by the firm’s U.K. business entity. The permit allows Aave to offer services such as issuing digital cash alternatives and providing payment services.

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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MakerDAO’s battle to keep up with DAI demand

Quick Take

  • The supply of the decentralized stablecoin DAI has grown to 379.1 million, up from 134.7 million on July 1st (a 181.4% increase).
  • New demand for DAI has been primarily driven by liquidity mining on Compound and yEarn. Increased demand has led to DAI consistently trading above its targeted $1 peg.
  • Currently, the focus is on changing the parameters of, and adding new, collateral types to keep up with growing demand.

This research piece is available to
members of The Block Genesis.
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