The veteran DeFi protocol might be bidding adieu to Ethereum.
In the context of its ambitious transformation project called Endgame, MakerDAO is now considering moving to a new blockchain, which would be a fork off Solana. What?!🤯
To say that this decision is controversial would be an understatement.
The Ethereum world is shaken, and Vitalik Buterin sold the remainder of his MKR tokens and publicly regretted that MakerDAO was “torpedoing itself in weird directions”.
Let’s look at MakerDAO’s plans, and what consequences they might set in motion.
MakerDAO ($MKR) is a decentralized lending-borrowing protocol, which allows users to mint the dollar-pegged stablecoin $DAI by depositing a larger amount of $ETH. DAI stability is achieved by over-collateralization.
Launched in 2017, it is one of the oldest DeFi protocols and the biggest decentralized stablecoin with a $3.8 billion market cap.
Presented by the founder Rune Christensen last year, the Endgame project has been facing much criticism from the beginning but progressively gained terrain. The reveal of its last phase, however, rekindled the debate.
In the short term, the plan is expected to help increase DAI supply to over 100 billion.
In the long term, it aims to develop MakerDAO’s ecosystem, improve governance, and increase scalability.
1. Transitioning from Maker and DAI to a unified brand and introducing new tokens (early 2024)
2. Launching the first 6 subDAOs to streamline Maker Governance’s workload
3. Introduction of governance AI tools and a Purpose Fund that will focus on public AI developments
4. Launching governance Participation Incentive using new tokens
5. Deploying a new blockchain that will house all backend logic for SubDAO tokenomics and MakerDAO governance security.
Rune precised that all user-facing products and systems will remain on Ethereum, its layer-2s, and other large blockchains, connected to the new chain through “advanced bridges”. $DAI will remain on Ethereum too.
Rune’s decision to leave Ethereum and fork the new blockchain off Solana will be a sensible loss for the former and a reputational win for the latter.
Indeed, Solana’s outages and its close relations with the defunct FTX have marked public opinion in the past, but Rune’s praising its technical quality could change the narrative.
Ethereum is still the king of smart contract platforms, and a point can be made that MakerDAO user base has primarily more allegiance to it. With Vitalik already actively promoting MakerDAO’s young competitor Reflexer Finance, user outflow 🏃 can be real.
Still, the development is undoubtedly interesting and could allow MakerDAO to exploit its potential to the fullest.