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Had no idea DAI was so heavily backed by USDC. Goes to show how much of the ecosystem is interconnected. More importantly, as the article shows, much of it is a

Had no idea DAI was so heavily backed by USDC. Goes to show how much of the ecosystem is interconnected. More importantly, as the article shows, much of it is at the mercy of governments, completely defeating the technology’s original purpose.

yieldcrv 4y ago
The MakerDAO/DAI community fucked up. People have criticized that community's collateral choices for a long time, as the article mentions, it is pejoratively called "wrapped USDC". Their primary issue was being early and there weren't really collateral choices. There was no trustless bridge for Bitcoin when they needed it. So they wound up using BitGo's WBTC. People got afraid of the volatility of the assets so started approving stablecoins as collateral, and Tether wasn't an option, other stables didn't exist, so they went with USDC. For more modern iteration of this concept with different collateral choices and community ethos, look at Magic Internet Money $MIM (yes, naming is intentional re-appropriation). So far all the collateral are yield generating assets, they generate yield from liquidity pools and volume. The automated liquidation functions the same and its worked. It has ancillary issues from its founder's reputation on other projects, so there is still room for yet another stablecoin that inspires more confidence without really needing the baggage of a leader.
- zaphar 4y ago
  At some point when the incentives keep driving these "institutions" to make choices like this maybe you need to start questioning how the existing structures drive those incentives forward.
  - yieldcrv 4y ago
    This rhetorical comment actually has a specific answer. MakerDAO tokens were sold to VCs like Andreesen Horowitz and Polychain and Dragonfly, the latter of which are less patient crypto native funds, who wanted the infrastructure for trading immediately. Their outsized ownership allowed for ethos breaking changes, to great financial success, but before organically created infrastructure was in place. There were no liquidity pools, liquidity pool optimizers, borrowing and lending protocols, value extraction. Again taking a look at Magic Internet Money, one part of the structure is that their SPELL token (the equivalent of the MAKER token) was launched more organically and at least has been able to keep an ethos within the owners. Nothing here prevents more consolidated ownership, or any novelties in governance (and I argue that governance can be vassstly improved, there are no bylaws or even continuity between governance anywhere). Only a case study into the contrast between MakerDAO and the answer to your rhetorical comment.
- arcticbull 4y ago
  You mean the same MIM whose CFO was Michael Patryn (0xSifu) of QuadrigaCX? That MIM?
  - yieldcrv 4y ago
    Sifu was with Wonderland The reputational contagion is what I’m referring to An autonomous stablecoin shouldn’t really need confidence based on tangentially related persons or an erratic and scattered founder I recognize the market need for a different stablecoin that takes the learnings from MIM and I’m excited that a more resilient one will come about
arcticbull 4y ago
I think it's interesting to remember too that these asset-backed centralized stablecoins (I'm referring to USDC here) are actually driving centralized control of the chains on which they reside. Asset-backed stablecoins, being ostensibly on-chain references to real-world value, cannot fork and retain their value across both forks. They provide the overwhelming majority of the actual economic utility of a given chain which means that a fork of any major chain that hosts them is basically impossible. A contentious network decision is at basically the sole discretion of Jeremy Allaire and lord help us Paolo Ardoino. So not just the government.

yieldcrv 4y ago

The MakerDAO/DAI community fucked up. People have criticized that community's collateral choices for a long time, as the article mentions, it is pejoratively called "wrapped USDC". Their primary issue was being early and there weren't really collateral choices. There was no trustless bridge for Bitcoin when they needed it. So they wound up using BitGo's WBTC. People got afraid of the volatility of the assets so started approving stablecoins as collateral, and Tether wasn't an option, other stables didn't exist, so they went with USDC. For more modern iteration of this concept with different collateral choices and community ethos, look at Magic Internet Money $MIM (yes, naming is intentional re-appropriation). So far all the collateral are yield generating assets, they generate yield from liquidity pools and volume. The automated liquidation functions the same and its worked. It has ancillary issues from its founder's reputation on other projects, so there is still room for yet another stablecoin that inspires more confidence without really needing the baggage of a leader.

zaphar 4y ago
At some point when the incentives keep driving these "institutions" to make choices like this maybe you need to start questioning how the existing structures drive those incentives forward.
- yieldcrv 4y ago
  This rhetorical comment actually has a specific answer. MakerDAO tokens were sold to VCs like Andreesen Horowitz and Polychain and Dragonfly, the latter of which are less patient crypto native funds, who wanted the infrastructure for trading immediately. Their outsized ownership allowed for ethos breaking changes, to great financial success, but before organically created infrastructure was in place. There were no liquidity pools, liquidity pool optimizers, borrowing and lending protocols, value extraction. Again taking a look at Magic Internet Money, one part of the structure is that their SPELL token (the equivalent of the MAKER token) was launched more organically and at least has been able to keep an ethos within the owners. Nothing here prevents more consolidated ownership, or any novelties in governance (and I argue that governance can be vassstly improved, there are no bylaws or even continuity between governance anywhere). Only a case study into the contrast between MakerDAO and the answer to your rhetorical comment.
arcticbull 4y ago
You mean the same MIM whose CFO was Michael Patryn (0xSifu) of QuadrigaCX? That MIM?
- yieldcrv 4y ago
  Sifu was with Wonderland The reputational contagion is what I’m referring to An autonomous stablecoin shouldn’t really need confidence based on tangentially related persons or an erratic and scattered founder I recognize the market need for a different stablecoin that takes the learnings from MIM and I’m excited that a more resilient one will come about

arcticbull 4y ago

I think it's interesting to remember too that these asset-backed centralized stablecoins (I'm referring to USDC here) are actually driving centralized control of the chains on which they reside. Asset-backed stablecoins, being ostensibly on-chain references to real-world value, cannot fork and retain their value across both forks. They provide the overwhelming majority of the actual economic utility of a given chain which means that a fork of any major chain that hosts them is basically impossible. A contentious network decision is at basically the sole discretion of Jeremy Allaire and lord help us Paolo Ardoino. So not just the government.