DAI is the largest decentralized steilcoom. On MakerDAO accounts for more than 60% of the assets used in DeFi. The most important event in the history of this stabilini was the transition from monologue Dai (Single-Collateral Dai, SAI) to multicellular Dai (Multi-Collateral Dai, or DAI MCD), which occurred at the end of 2019, two years after the launch of MakerDAO.
The transition from SAI to DAI is that now DAI can be issued not only secured the broadcast wrapped, but secured other ERC20-tokens on the Ethereum blockchain. It is assumed that the diversification of the portfolio collateral will make DAI more reliable. Team Maker stresses that in the long term, with the approval of the holders of MKR (control tokens MakerDAO), licenzirovanie practically any asset that has an acceptable risk parameters can be added to the portfolio of collateral DAI.
These risk parameters has not yet been determined. For example, nobody discusses what risk parameters ETH or other token should be excluded from the portfolio of mortgages DAI. However, the first experience of selecting new collateral to DAI already is, he and the subject of this article.
The selection of new mortgages
Forum Maker offered more than a dozen new pledges for DAI, including Liquidity Uniswap Tokens and stabilini provided by Fiat. To the vote of the holders of MKR on the priority of the mortgage assets, which took place from 12th to 19th August, 2019, issued only 6+1 tokens: OmiseGO (OMG), Golem (GNT), Augur (REP), DigixDAO (DGD), Basic Token Attention (BAT), 0x (ZRX) and Ethereum (ETH).
The results of this voting are as follows:
||43 274,50 MKR
||43 274,50 MKR (100,00%)
||MKR 0 (0.00%)
||35 459,37 MKR
||32 697,36 MKR (92,21%)
||2 762,00 MKR (7,79%)
||22 565,34 MKR
||22 525,05 MKR (99,82%)
||40,29 MKR (0,18%)
||23 201,59 MKR
||17 648,57 MKR (76,07%)
||5 553,02 MKR (23,93%)
||13 051,22 MKR
||5 468,73 MKR (41,90%)
||7 582,49 MKR (58,10%)
||12 342,14 MKR
||4 683,70 MKR (37,95%)
||7 658,44 MKR (62,05%)
||12 184,94 MKR
||2 040,43 MKR (16,75%)
||10 144,50 MKR (83,25%)
On the eve of launching of MCD, 9 Nov 2019, Head of Backend Services from Foundation Maker Niklas Kunkel mentioned in the Telegram chat MakerDAO all of the contenders on this list, except for the GNT:
«Developed here: the BAT will be included at startup.ZRX, REP, OMG DGD and we are considering adding in the near future.»
Finally, in the post about the launch of the MCD dated November 18, 2019 was mentioned only two ERC20-token:
«The types of mortgages offered in MCD at the moment, it is ETH and BAT, digital advertising token Brave. Community Maker currently estimates that the additional token token al — REP market predictions of the Augur».
Despite the fact that the REP has received the most «for» votes from the holders of MKR, the first and only addition to the ETH became a BAT. In the above post, there is no explanation of this change of priority is contrary to the results of the vote, but the forum Maker in the section on liens one of the most discussed topics is the argument Micah Zoltu against Rep.
The problem of spirals of deleverage
Ari Class of Mundt [Ariah Klages-Mundt] and Andria mink [Andreea Minca] in their study of spirals of deleveraging, which is subject to a decentralized stabilini like DAI, found at such tablconv stable and unstable region. The unstable region in their model exist even when a stable price ETH as collateral.
DAI is secured by a portfolio of ETH, BAT and reps that won in the vote on the priority of liens, and more reliable than SAI? We chose to evaluate two criteria. First, price stability and BAT REP, how they react to the fall in the price of ETH and how they are volatile. Second, the liquidity of the BAT and the REP compared to the ETH, as they can withstand large liquidation.
The first criterion: correlation with ETH and volatility
The diversification of the portfolio of mortgages DAI to improve the stability of the system for the price of ETH is complicated by the fact that in 2019 ETH was the most correlated scriptaction. 2019 Annual Crypto-Correlations Review is from Binance Research suggests that scriptactive retain a high correlation with each other, the correlation may increase during adverse price movements.
BAT REP, and have positive correlation with ETH more than 0.5.
BAT REP and more volatile than ETH, although since the beginning of 2019, their volatility has declined substantially.
Positive correlation with ETH and greater than ETH, the volatility, suggests that in our first BAT REP criterion and not make DAI more reliable than SAI. When ETH price drops, prices BAT REP and also fall but to a greater extent.
The second criterion: liquidity
To compare liquidity ETH, BAT REP and we have used historical data Coinpaprika about the depth of their market, measured as a ten percent section of the stock glass from the average price (10% section of the order book from the midpoint price). We are interested in the possibility of mass sales of collateral, so we do not look at the amount bid — and ask-orders and bid only on orders.
Liquidity ETH rose from the beginning of 2020 by 60%, from $104 million to $166 million.
The liquidity of the BAT also increased from the beginning of 2020 and also by 60%, from $2 million to $3.2 million
For each collateral asset Maker includes a debt ceiling (debt ceiling) the limit of emission of DAI secured this asset. To assess the balance of the portfolio of mortgages DAI you can use the ratio «liquidity/debt ceiling» (liquidity/debt ceiling).
For example, take the information on the liquidity and the debt ceiling for ETH and BAT for 09 February 2020:
Source: Coinpaprika, Daistats
Thus, despite the fact that in this day liquidity ETH exceeded the liquidity of the BAT 52.48 times, the coefficient of resistance to mass sales at ETH proved to be more than the BAT, only 1.25 times.
The liquidity of the BAT in the second half of 2019 ranged from $2M to $3 million, so his «liquidity/debt ceiling» were seldom less than 0.67 and more than 1. Liquidity ETH over the same period ranged from $90 million to $140 million, and its «liquidity/debt ceiling» — from 0.72 to 1.12.
Because the BAT is lower than ETH, the ratio of «liquidity/debt ceiling», according to our second criterion is the current version of DAI is also more reliable than SAI.
REP is not yet added to the portfolio of collateral DAI and the debt ceiling is not installed. We can assume that it will be less than the BAT, as REP less liquid.
Liquidity REP in the second half of 2019 was almost always six figures, but at the beginning of 2020, she began to grow and on February 9, 2020 amounted to $1.283 million, assuming that the ratio of «liquidity/debt ceiling» for all mortgages DAI should be about the same, but REP is still difficult to claim the debt ceiling more than $1 million.
In assessing the sustainability of liens DAI to mass sales it is necessary to consider the sensitivity of the liquidity of the collateral to drop their prices because the bonds are only sold when their price falls. On the charts of the price and liquidity of the ETN, and the BAT REP there is a positive correlation – the drop in prices accompanied by a drop in liquidity.
Join the race of priority liens. The primary evaluation criteria of stability of prices and liquidity is no reason to believe DAI, secured ETH, BAT and REP, more reliable than SAI. On the contrary.
If you don’t like those conclusions, then perhaps you do not like the fact that MKR as collateral of last resort for DAI not too different from a BAT REP in terms of correlation with ETH, volatility and liquidity. At the same for MKR, as collateral of last resort, the debt ceiling does not exist by definition.
DAI is positioned as a decentralized stablon. Stablon have decentralized the decentralized provision of alternative tokens open public blockchains and tokens of decentralized applications on these blockchains. The problem is that these tokens are characterized by a strong positive correlation, which could increase in periods of adverse price movements, as well as high volatility and low liquidity. This complicates the diversification of the portfolio of mortgages DAI and forced to think about ERC20 tokens secured by traditional assets under the control of the custodian. Think about how stabilio it is important to remain decentralized.
Rune Christensen saw the potential resolution of the dispute on pledge of the real world to save SAI under the name PurityDai. The idea that MakerDAO emits not one but two stablein: SAI provided only ETH and DAI, which are provided by a portfolio of mortgages, including traditional assets. He, in particular, notes:
«What’s really cool about this approach is that PurityDai will be a unique asset in the sense that it will be provided only ETH and the Deposit cannot be confiscated, but he will be protected against «black swans» that could happen with the price of ETH, because it will use the same MKR that Dai and other synthetic assets, and thus will benefit from a highly diversified protection against black swans, which give the real assets of the world.»
In the case monologues Dai liquidity MKR as the guarantee of last resort should be enough for «black swans» that could happen with the price of ETH. In the current version multilogue Dai liquidity MKR already should be enough for «black swans» not one, but two mortgages — ETH and BAT. Question how will change the liquidity of the MKR as the growth in supply of synthetic assets MakerDAO and adding new mortgages, remains open.
In the end, no matter what it is the community as a result of disputes about potential collateral for DAI, decisions about adding new collateral and the debt ceiling for them to accept pseudonymous MKR holders who are not required to publicly justify their choice.