In an effort to promote the use of USDP, Paxos offered a deal to MakerDAO for greater use of its stablecoin in collateralizing DAI. One of the arguments made is a decrease in reliance on USDC.
Paxos propose un accord à 1,5 milliard de dollars à MakerDAO pour la collatéralisation du DAI
Paxos approaches MakerDAO to promote USDP
In an effort to promote the use of its stablecoin, the company Paxos opened a discussion on the MakerDAO governance forum, to increase the use of USDP to $1.5 billion in the collateralization of the DAI.
DAI is the first decentralized stablecoin in the ecosystem, and its algorithmic operation has proven itself in recent years. Indeed, in order to issue new tokens, it is a question of providing collateral, like a loan on Aave for example. When this collateral is not respected, a liquidation system is put in place to ensure the good health of the DAI.
The idea is therefore to promote greater use of USDP in this mechanic, in exchange for which Paxos will offer 45% of the US federal rate as a marketing fee. With a current rate of 4.3%, Paxos estimates that this agreement would bring MakerDAO $29 million per year, paid in USDP.
The choice of indexing costs to key rates is not insignificant. And for good reason, the USDP works centrally, and a large part of its capitalization is backed by US Treasury bonds whose return depends in particular on these rates.
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Diversification from USDC
If such an agreement were to occur, Paxos argues that it would allow DAI to diversify from its exposure to USDC. The latter is often a reason for “criticism” of the DAI, because of its importance in the collateralization of this stablecoin, namely around 30% according to Paxos.
While it is indeed interesting for MakerDAO to diversify its risk in terms of centralized players, let’s qualify these remarks. In effect, Paxos bears similarities to Circlethe issuing company of USDC, in the manner of issuing its USDP, and is also a centralized player.
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Nowadays, $1.5 billion represents nearly 30% of the capitalization of the DAIand that cap is set to increase to 2 billion in 2023. Nonetheless, the stablecoin’s capitalization is expected to swell as its usage increases as the market actually picks up, diluting USDP’s share of the market. collateralization.
If agreed, this will be signed with the RWA Foundation (Real World Asset), which represents MakerDAO for commercial partnerships with legal entities.
These discussions are currently only at the proposal stage, and it is still too early to know if these terms will be accepted by the governance of MakerDAO. However, it is interesting to observe that many ways to secure the DAI gravitate around the protocol, which tends to reinforce it in the event of failure of one of these collateralisation elements.
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Source: Governance Forum
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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
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