MakerDAO (MKR) enables new tokens as collateral for its new protocol

By: Ali Raza
Ali Raza
Ali plays a key role in the cryptocurrency news team. He loves travelling during his spare time and enjoys… read more.
on Apr 21, 2021
  • The protocol is expected to make several changes to its smart contracts when the proposal is approved.
  • The MakerDAO community is looking to do a governance vote to upgrade its MIP-45 liquidity system.
  • The community has also proposed to include the integration of DeFi aggregator to enable more competition.

Stablecoin protocol MakerDAO (MKR) has announced the expansion of its governance vote to enable new tokens as collateral.

The manufacturer is considering seven tokens as collateral, including bBadger, BadgerDAO, 1 Inch Decentralized Exchange Token (1INCH), Rocket Pool Staked Ethereum (eETH), and Moss Carbon Credit (MCO2).

Considerations for three liquidity providers

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There are considerations for three liquidity provider tokens to be used as potential collateral. These include GUSD-DAI token, Uniswap’s DAI-PAKLP token, as well as SushiSwap’s DAI/USDC LP token. If they are approved the assets may be used as collaterals for the support of new DAI creation.

After the “Black Thursday” crash in March last year, the protocol acted quickly to upgrade. The crash led to the liquidation of user guarantees after Ethereum’s price fell by 50% within three days.

Several changes expected from the protocol

The protocol is expected to make several changes to its smart contracts when the proposal is approved. One of the changes will include a stop threshold from 50,000 to 75,000 MKR. This is an important safety feature that enables the protocol to automatically shut down and making the collateral readily available for repayments. This was created to prevent the mishap that happened last year during the Black Thursday crash, according to the firm.

Other changes have also been proposed for the system, which includes support for flash loans and access to a higher percentage of market liquidity.

Other proposals include the integration of the DeFi aggregator to enable more competition among bidders and the improvement to the auction model to liquidate Vault collateral.

DAI voting started on April 19 and will continue until May 3 (14 days). At press time, about MKR 26,000 has been realized in support of the proposal. And it seems the interest in DAI has also surged recently.

Since January, the amount of DAI tokens in circulation has increased by nearly 200% to 3.4 billion tokens.

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