Maker aims for $100bn stablecoin despite AI delay
While the stablecoin market booms and titans of finance launch their own dollar-pegged tokens, Maker’s DAI has lost steam.
Stuck with a supply of about 5 billion tokens, DAI has seen new, fast-growing stablecoins close the gap. Incumbents Tether and Circle, meanwhile, are extending their lead.
But an ambitious and controversial overhaul proposed by Maker co-founder Rune Christensen is just weeks away from its multi-step rollout.
First proposed in 2022, the plan, dubbed “Endgame,” will feature a rebrand, new tokens, new ways to earn yield, so-called subDAOs and artificial intelligence — all designed to invigorate MakerDAO, the lumbering cooperative that runs the Maker protocol.
But they’re also designed to take Maker and its new stablecoin mainstream.
In his latest primer, Christensen said the goal is to raise the DAI supply to “100 billion and beyond” — just shy of Tether’s $114 billion.
“We want to be able to reach a broader audience,” Christensen said.
That’s a big ask.
While new products regularly boast they will “onboard the next billion users,” most DeFi applications serve only a couple thousand.
Endgame Controversy
Stablecoins are tokens meant to hold their peg to another asset, typically the US dollar.
They’re the closest thing to cash in the crypto economy, and one of the few blockchain-based products to have found real-world utility.
Maker’s DAI was conceived as a “decentralised” alternative to USDT and USDC, stablecoins that can be frozen or seized by their issuers, much like money in a bank.
Christensen says Endgame is a “Trojan horse” that can bring decentralised currency to the masses. But the proposal has been controversial.
Over the years, it has gone through myriad iterations and sometimes contentious votes in which critics accused Christensen of abusing his outsize influence in MakerDAO.
Endgame also has its supporters.
“Right now, our parents, grandparents, aren’t going to log onto Maker,” Mark Phillips, co-founder at Steakhouse Financial, a crypto advisory firm that works with MakerDAO, told DL News. Endgame could change that, he said.
Investors appear to like the plan. The MakerDAO governance token, MKR, has outperformed this year, rising more than 60%, while the value of the entire crypto ecosystem is up 34%
Maker’s rebrand
The first step in Endgame’s “launch season” will be the unveiling of Maker’s rebrand, as well as the names of its new stablecoin and governance token.
A month later, both will launch alongside a new mobile application.
Users will have the option of upgrading their DAI and MKR to “NewStable” and “NewGovToken” if they want to take advantage of Endgame’s key feature: yield farming.
Users can earn interest on the new stablecoin via Maker’s existing savings rate — 7% on Friday — or in the form of governance tokens.
Those who hold the new governance token can “activate” it to earn interest and participate in Maker governance.
The most committed members of the cooperative can earn even greater rewards by keeping MKR or the new governance token locked on the platform.
“It’s the best place to just save and grow your money for the long term,” Christensen said.
The rewards should draw new voters to MakerDAO, which is now dominated by “whales” who own so much MKR they feel obliged to participate, he said.
Philips agrees.
“One of the issues broadly in crypto and DeFi is, there’s often disincentives to participate in governance,” he said.
Artificial intelligence
The last step will be the launch of Maker’s first subDAO — a cooperative within the MakerDAO cooperative.
The first subDAO will manage Spark, a year-old lending protocol inspired by Aave and launched by Phoenix Labs, a company led by Spark’s founder, Sam McPherson.
SubDAOs are meant to cure one of the problems that ails MakerDAO: its cumbersome bureaucracy. By outsourcing management of certain features to subgroups, the volunteers who help run MakerDAO will face less burnout, Christensen said.
That plan has hit a snag, however.
Christensen had originally hoped to launch several subDAOs simultaneously.
Instead, only the Spark subDAO will launch at first, with others to follow as needs arise, Christensen said.
That’s because Endgame includes a big bet on artificial intelligence.
“Things are a little bit convoluted right now,” MacPherson told DL News, referring to MakerDAO governance.
Eventually, AI will be used to trawl MakerDAO’s forums, where members debate proposals and service providers share data and progress reports.
The hope is that AI will be able to distil activity on the forum and help members make informed decisions.
AI “will help the average voter understand in a very simplistic way, are things going well, are things not going well,” MacPherson said.
But AI hasn’t advanced quickly enough.
“AI is really great most of the time, but it also has a lot of hidden errors and small issues that make it unreliable,” Christensen said.
In the meantime, the Maker co-founder believes a new, cohesive brand and opportunities to earn yield from one’s tokens will drive mass adoption.
“It is a bit of an experiment in that sense,” he said. “Maybe that’s just missing in crypto is, just try a little bit harder making it really accessible.”
Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can contact him at [email protected].
