untitled design

MakerDAO Expands Collateralized Assets List and Improves Liquidation Mechanism

MakerDAO’s DeFi Protocol has launched a community vote on expanding the list of cryptoassets to secure, as well as updating the liquidation mechanism.

MakerDAO Community will vote for a number of new types of collateral, potentially increasing the number of cryptoassets that can be used to issue the DAI stablecoin. Voting began on April 19 and will last fourteen days.

Seven tokens have been proposed as new collateral for the protocol, including MCO2, rETH, 1INCH, and bBADGER. Three liquidity provider tokens are also considered promising collateral, including DAI-USDC, DAI-PAX, and GUSD-DAI. If approved, these assets can be deposited as collateral for the creation of new DAIs.

The MakerDAO community is also voting on a proposed MIP-45 elimination system update. The protocol developers have been working on the update since last spring after the markets crashed. On March 12, 2020, Ether traded at $ 194 and dropped to $ 124.

This rapid drop in ETH led to massive liquidations of collateral positions. As a result, the holders of collateral lost $ 2.5 million in storage, and the $ 4 million DAI stablecoins were no longer secured. The Maker developers describe the new elimination mechanism as improving the predictability and security of the protocol:

“The functionally new liquidation system will provide greater security, predictability and decentralization, facilitating wider participation of the Maker community and the DeFi sector as a whole.”

If the proposal is accepted, a number of changes will be made to the smart contracts of the protocol, including an increase in the “emergency shutdown threshold” from 50,000 to 75,000 MKR. This mechanism is an important security feature that allows the system to shut down and provide access to the underlying collateral for redemption by DAI and vault owners.

Other proposed modifications include improvements to the auction model to eliminate collateralized storage, integration of the DeFi aggregator to increase competition among bidders, and increased access to market liquidity and support for urgent loans.

Recall that at the beginning of the month, the founder of MakerDAO Rune Christensen called for the development of clear rules for regulating decentralized finance (DeFi). This is necessary for the broader integration of DeFi with the financial sector.

You may also like

Get the latest

Stay Informed: Get the Latest Updates and Insights

 

Most popular