James Lovett is a talented crypto enthusiast who finds pleasure in sharing more knowledge on fintech, cryptocurrency as well as blockchain and frontier technologies. He likes to keep himself furnished and updated with the latest innovation in the crypto industry, blockchain technology, Internet of Things (IoT) and other technologies. As a result, he tries to furnish ardent crypto supporters with the latest news on blockchain and distributed-ledger technologies. Indeed, Blockchain and Cryptocurrency is changing the world as we know “one block at a time”. As a hobby, he also trades in small amounts of cryptos every now and then. An author with experience writing for tech, digital, and cryptocurrency blogs!
Compound (COMP), Chainlink (LINK), and Loopring (LRC) are the new additional collateral asset types to popular crypto project MakerDAO upon the community’s request.
The announcement from Maker came on Wednesday, showing that the MakerDAO community had voted in support for the addition of the three new tokens to the platform: Chainlink, Compound, Loopring. During the summertime, community members pitched proposals to the mentioned three tokens onto the protocol. Fortunately, this week, the community voted for the tokens’ integration via Maker’s on-chain governance program. Users of the platform can now generate DAI loans by locking those new tokens in the protocol. DAI stablecoin is an ERC20 token that is pegged to the U.S. dollar.
— Maker (@MakerDAO) September 30, 2020
Following the new listing of LINK, COMP, and LRC, MakerDAO now supports a total of 11 new DAI vault pairs in its protocol since the start of the year. Other tokens that users can rely upon to secure DeFi loans are Tether (USDT), Kyber Network Crystals (KNC), TrueUSD (TUSD), Wrapped BTC (wBTC), Paxos Standard Dollar (PAX), USD Coin (USDC), Decentraland (MANA) and so on.
Rectifying DAI’s Peg Instability
At one point, DAI lost its $1 peg, so the listing of these coins is meant to inspire collateralizing more DAI as users get to have more options. During the recent DeFi’s yield farming craze, peg instability occurred in DAI. Therefore, the Maker community voted — in a bid to rectify the instability — for the lowering of collateralization requirements for DAI’s main USDC vault in the belief that more DAI amounts would reach the market. With 372 million USDC locked, USDC remains DAI’s most popular collateralization option.
The proposal’s implementation that the community suggested seems to have bared fruits as DAI price did drop to $1.01. Even as the community proposes to maintain a steady peg on DAI, Rune Christensen, MakerDAO founder, believes that having more collateral is the way to go as the only option is to have more coins on the market.
Chainlink Users React to the Listing
In the wake of the new listing, a couple of Chainlink users have come out to criticize the LINK token addition. The users argued out that depositing LINK crypto on the protocol presents a significant security threat. Their main argument was that MakerDAO’s existing oracle is vulnerable to numerous attacks because it is centralized. As a consequence, they prefer to hold their coin instead of risking to deposit it unless MakerDAO shifts to Chainlink oracles.
However, the Maker community appeared to positively support the addition of LINK and other tokens since they view it as a good effort to incentivize more DAI lending on the platform. Less DAI stablecoin that has been in the market has caused DAI pegged price to be unstable. Therefore, LINK’s users’ reaction has shown is likely to interfere with Maker’s good intentions.