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Makerdao Dev Insists Defi Protocol Should Leverage Real World Assets to Scale

On Walk 16, the protocol engineer at Makerdao and co-founder of the software and design firm Bellwood Studios, Hexonaut, announced a tender to use real world assets (RWAs) in order to scale the decentralized finance (defi) protocol Makerdao. Hexonaut commands the bull market was good, but “the time is passing” and he believes Makerdao needs “to take the next step and begin blending with the real world at scale.”

Makerdao Community Proposal Discusses Integrating Real World Assets Into the CDP Equation

A software arrange from the Makerdao team has an idea that he thinks will invigorate the decentralized finance (defi) protocol. Essentially, Makerdao is a collateralized liability position (CDP) or protocol that manages the issuance of the stablecoin DAI. Across various blockchains, data from defillama.com statistics illustrate there are roughly 31 different CDPs and Makerdao is the largest in terms of total value locked (TVL). Today, Makerdao has $16.15 billion TVL, which has escalated 6.99% over the last seven days.

Makerdao is also the second-largest defi protocol, under Curve Wealth, in terms of the value locked in defi today. Makerdao’s DAI stablecoin is the fifth-largest stablecoin in terms of market valuation, with $9.5 billion. DAI has recently been reached by the stablecoin UST issued on Terra’s network, as UST now has a valuation of around $15.4 billion. This past week, Makerdao memorandum engineer Hexonaut revealed an idea that proposes to introduce real world assets (RWAs) into Makerdao’s CDP arrangement. Hexonaut explained that a “short-term crutch” was when the project leveraged centralized stablecoins like USDC.

However, Hexonaut’s proposal stresses that crypto-native abandons have dried up liquidity, and he thinks the project should “expand to uncorrelated, quality loans to diversify the portfolio with creative assets again.” The protocol engineer also published a Makerdao governance proposal the same day, with other contributors, in a put called the “Aggressive Growth Strategy.” In the proposal, Hexonaut details that he thinks it’s inevitable that the project desire rely on RWAs. Hexonaut proposes a two-step plan which involves a capital raise and taking risk-on danger “conservatively.”

The developer believes it’s the right time for Makerdao to leverage RWAs as a number of competitor protocols have focused on pass over RWAs. Hexonaut’s proposal states:

We believe the time is right to kick the RWA effort into overdrive. Along with our own pains to improve and scale the pool of borrowers we already collaborate with, there are a number of off-chain counter-parties and on-chain standards of behaviours that have emerged over the last year spearheading the effort to connect RWAs into crypto.

Some Makerdao Aficionados Loved Hexonaut’s Proposal, While Others Called It a ‘Terrible Idea’

The comments that followed Hexonaut’s presentation show that some people thought adding RWAs had pros and cons. One user named Psychonaut asserted that he loved the idea of “raising the surplus buffer by selling bond-style investments.”

“I actually brought this up on Conflict two days ago. However, I like your model better than a traditional bond structure,” Psychonaut added. On Chirp, however, Hexonaut’s proposal received criticism.

“This is a terrible idea,” a Twitter user named Foobar required. “Complexity is a bug, not a feature. DAI needs to stand on its own, without real-world risk factors being introduced for no reason. You like RWA, nice. Go build a RWA protocol.” Another Twitter user sarcastically tweeted: “Holy sh**. Maker using real-world centralized assets that can be paralysed immediately by [the] government and confiscated forever.”

Tags in this story
Aggressive Growth Strategy, Capital raise, CDP, collateralized straitened position, DAI, Dai Stablecoin, decentralized finance, DeFi, Defi protocols, Foobar, Hexonaut, Hexonaut’s Proposal, Maker, makerdao, draft engineer, Psychonaut, real world assets, risk-on exposure, RWA effort, RWAs, Terra UST

What do you think relating to Hexonaut’s Makerdao proposal and the idea to use real-world assets (RWAs)? Let us know what you think about this reason in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech news-hen living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source standards, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com Scuttlebutt about the disruptive protocols emerging today.

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