Author(s): @Bobby_StableNode, @Kene_StableNode Tags: asset-onboarding Asset Name: Dai Asset Code: DAI Submission Date: 2022-10-07 Ratification Date: 2022-10-25 Status: Active Forum URL: https://forum.jetprotocol.io/t/asset-onboarding-application-dai-wormhole/1086
- What is your motivation for submitting this application?
Onboarding DAI will allow Jet Protocol users to interact with a decentralized stablecoin alongside the popular stablecoins USDC & USDT. DAI is arguably one of DeFi’s battle tested stablecoins and with recent Pyth support, DAI can now be used in DeFi Solana Ecosystem.
Jet Protocol will enable users to interact with a battle-tested stablecoin that has proven liquidity and a stable peg. The utility of the DAI stablecoin reaches far beyond the Ethereum ecosystem and this addition would do a good job of capturing more users who are more comfortable using ethereum native stablecoins, a good example of this is the success of USDC on the Solana Blockchain.
Currently, the limitation of Dai on Solana has been its liqudidity, which could be improved by integrating with Jet Protocol.
1. Please provide a brief, high-level description of the asset’s native ecosystem (project), including protocol’s type (peer-to-peer/ peer-to-liquidity/ etc.).
DAI is an Ethereum Native Over-Collateralized Stablecoin built by Maker DAO Protocol and managed by the Maker DAO Community through Governance.
Maker DAO was founded by Rune Christensen, but no longer occupies a leadership position at Maker DAO. However, he maintains an active role in the MakerDAO community.
3. Please indicate the ICO date, initial price and valuation of the token and total capital raised (in USD and crypto terms).
Date of Creation: December 2017
Initial price and valuation: $1
Total capital raised: Not reported for DAI
4. How much of the capital raised via the ICO was converted into FIAT (in terms of FIAT currency and amount of tokens)?
DAI is minted through an over-collateralized vault mechanism. There were no Pre-ICO investors.
DAI is freely mintable by anyone, there was no predetermined distribution.
Demand for financing and DAI has propelled Maker’s monthly net income to over $63 million in 2021. Breaking down this performance:
First-half 2021 lending revenues were $7.7 million monthly, up 13x from the second half of 2020.
Maker’s most reliable source of income is lending. Liquidation profits from liquidated vault fines (13%) further boosted Maker’s performance. May 2021 liquidation revenues jumped to $9.4 million due to market volatility.
A Borrowing Fee is levied by the Maker Protocol on DAI produced by Maker Vaults. It is a variable-rate fee that alters in response to decisions made by the risk teams’ proposed by Maker’s governing body.
Trading commissions are another source of income for Maker DAO. These trading profits are the sum of the Maker’s Price Stability Module fees (PSM). In May and June 2021, this module had a considerable increase as demand for DAI increased and crypto collateralized loans declined. In order to meet the demand for DAI, the protocol has currently converted more than $3 billion of USDC to DAI.
The trading costs for minting and borrowing DAI from Maker DAO in 2021 were $3 million because the fees are set at 0.1% of the projected volume, which is $3 billion. However, currently the fee for PSM is 0.
A detailed breakdown of Maker DAO Economics is available here.
Maker DAO has been audited by three leading security firms: Trails of Bits, Peckshield and Runtime verification, these audit firms focus on various areas, to learn more about this check out the Audit Reports here.
Yes, Maker DAO is open source.
DAI is an over-collateralized stablecoin that maintains a 1:1 peg to USD that is maintained by MakerDAO.
DAI provides a decentralized alternative to other stablecoins within the Ethereum Ecosystem. The value of DAI is pegged to that of the United States dollar. It allows people to use DAI as not only a stable store of long-term value, but also a viable option for day-to-day transactional purposes.
DAI is a popular stablecoin with integrations across Ethereum Virtual Machines (EVMs) compatible chains such as: Polygon, Binance Smart Chain, Fantom, Avalanche, xDAI, and other Non-EVM compatible chains such as: Polkadot, Cosmos and Solana.
6. Please provide all Smart Contract addresses. If the project is open source, detail how the Smart Contracts are implemented.
3. Please provide 7-day asset trading history (daily aggregated trading volumes for trading pairs of assets with USDC).
4. A Pyth oracle is required to successfully onboard an asset to the Jet Protocol. Confirm there is an active Pyth Oracle price feed, or provide insight into the asset’s timeline for onboarding to Pyth.
Pyth - Markets
5. How often does the asset drop significantly in price? Please provide a link to the price history.
The DAI stablecoin has proven to be battle tested in recent times, a more detailed historical view is available here.
DAI has been able to maintain a relatively strong peg over the years, however it has gone below 0.95, on the flip side it has also gone above $1.05. Such off pegs occured largely due to imbalance in supply and demand. For example, during the “DeFi summer,” the demand for Dai was high to be used to generate yield in various protocols, pushing the price above the peg. However, after the implementation of PSM, the price has been stable. A true test of its peg was in the face of the UST crash, DAI was able to maintain its peg at $1.
7. For algorithmic stablecoins only: Please provide details on the risks associated with the design.
8. For wrapped assets only: Which bridges are used? Are they custodial or non-custodial? Are they audited?
The Wormhole bridge is used to bridge DAI over to the Solana Ecosystem, the Wormhole bridge is custodial, as it relates to security, the bridge is audited multiple times a year, audit reports can be found here, Wormhole also runs an audit program.
Not a significant amount on Solana ecosystem for now.
Any user who wants to generate Dai can deposit collateral into a Vault and pay a Stability Fee.
Vault users can add or withdraw Collateral and produce Dai without time limits. As long as Vault owners maintain a minimal Liquidation Ratio, they can freely engage with their Vaults. When a Vault’s Liquidation Ratio is breached, the position is liquidated.
3. Is the asset supply expected to increase or decrease over time? Is there a token burn mechanism? Is the project able to mint more tokens in the future?
The amount of DAI in circulation is largely determined by the collateralization ratio.
The collateralization ratio refers to how much collateral you need to have in your Maker DAO Vault Position to mint DAI, considering that DAI is backed by various crypto assets, the user needs to have enough of those assets in their position to mint DAI, the particular amount of the assets needed to mint DAI is determined by the collateralization ratio, which translates to the ratio of collateral needed to mint DAI.
6. Are there tokens on the vesting schedule? If yes, what is that schedule and related vesture limitations?
No, it was not
5. Has the project or the asset obtained any legal opinions on the regulatory standing of the token? If yes, please provide links to the relevant documentation.
No, it has not
6. Has the project or the asset had any legal interactions? If so, describe and provide documentation.
Link(s) to project’s documentation portal/ source code for the system(s) that interact with the proposed asset:
The poll below has been added by the JetDAO Governance Committee and is solely for signaling purposes to showcase the sentiment of the community.