[Asset Onboarding Application] - $DAI (Wormhole)

[Asset Onboarding Application] - $DAI (Wormhole)

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

Application Profile

  1. 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.

2. What is your association with the proposed asset?

StableNode is a delegate in several protocols, including MakerDAO, the makers of the DAI Stablecoin.

3. What are the key benefits for the Jet Protocol to onboard the asset?

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.

4. What are the known limitations of the asset?

Currently, the limitation of Dai on Solana has been its liqudidity, which could be improved by integrating with Jet Protocol.

Project Profile

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.

2. Who are the founding members? What is their current involvement with the project?

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)?

N/A

5. What was the way of issuing and distributing the tokens? Were there pre-ICO investors?

DAI is minted through an over-collateralized vault mechanism. There were no Pre-ICO investors.

6. What is the current token distribution (project team vs. investors vs. public)?

DAI is freely mintable by anyone, there was no predetermined distribution.

7. Are there any fees generated by the protocol? If yes, please provide details and amounts.

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.

8. Is the protocol audited? By what firms? Please provide link(s) to the audit documentation.

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.

9. Is the protocol open source? If yes, please provide links to the repository.

Yes, Maker DAO is open source.

10. Other relevant project data or comments:

N/A

Asset Profile

1. Asset name: DAI Stablecoin (Wormhole)

2. Asset type: Wrapped

3. One-sentence description of the asset:

DAI is an over-collateralized stablecoin that maintains a 1:1 peg to USD that is maintained by MakerDAO.

4. What’s the purpose of the asset within its native ecosystem?

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.

5. Does the asset have any use outside of its native ecosystem (integrated protocols)?

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.

Asset Liquidity

1. What exchange(s) support the asset?

DAI is available on Orca, Serum, Radium and Aldrin

2. Does the asset have liquidity on Serum? What is the liquidity depth (resting orders)?

No

3. Please provide 7-day asset trading history (daily aggregated trading volumes for trading pairs of assets with USDC).

N/A

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.

6. For stablecoins only: Has the asset ever lost the peg? If yes, for what reason?

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.

N/A

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.

9. What amount of asset’s liquidity exists in the integrated protocols (if applicable)?

Not a significant amount on Solana ecosystem for now.

10. List any parties interested in taking part in liquidations for the proposed asset type?

N/A

Key Mechanics

1. How many active addresses/ users currently hold the asset?

357 active holders

2. Please provide a brief overview of the tokenomics.

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.

4. Please explain the staking mechanism (if any).

N/A

5. Please explain the slashing mechanism (if any).

N/A

6. Are there tokens on the vesting schedule? If yes, what is that schedule and related vesture limitations?

N/A

7. Are any tokens allocated for specific purposes or issuance schedules (e.g. liquidity mining)?

No

Legal Profile

1. Is the project or the asset owned by any incorporated organization?

No

2. In which jurisdictions was the token issued?

N/A

3. Was the token issued as part of the regulatory process (e.g. securities offering)?

No, it was not

4. Was the token issued as part of the fundraising process?

N/A

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.

$30M MakerDAO ‘Black Thursday’ Class-Action Lawsuit Annulled as Parties are Bound to Resolving Disputes through Arbitration

Links

Link to project’s white paper:

https://makerdao.com/en/whitepaper/

Link(s) to active communities related to the project:

Link(s) to project’s documentation portal/ source code for the system(s) that interact with the proposed asset:

Link(s) to audits - both procedural and Smart Contracts:

Other relevant links:

List all relevant Solana addresses here:

FYpdBuyAHSbdaAyD1sKkxyLWbAP8uUW9h6uvdhK74ij1

The poll below has been added by the JetDAO Governance Committee and is solely for signaling purposes to showcase the sentiment of the community.

Should $DAI be included as an asset type on Jet Protocol?
  • Yes
  • No

0 voters

7 Likes

Hi @Kene_StableNode !
Thank you for posting your proposal to the Jet Protocol forum. We have reviewed your post and confirm that it is complete. This asset application is now under review by our Governance Committee. They will follow up in 7 days maximum and launch the Off-Chain poll, or provide additional feedback on blockers that need fixing before moving forward.

2 Likes

The JetDAO Governance Committee has completed a high-level review of this Asset Application and determined the asset as acceptable to continue with the Onboarding Application. This is not an endorsement of the asset from the Governance Committee.

To continue the onboarding process, we have launched a 7-day off-chain community sentiment poll (see original application post) to gauge the interest of onboarding this asset, as well as help facilitate the community discussion.

Following the conclusion of the Poll, the Governance Committee will publish a summary of the CODEC assessment with a formal decision of allowing the Asset to move forward with the On-chain governance vote and potentially onboarding.

This Poll will run 7 days, and is used to gauge the interest of the Jet Protocol Community on Onboarding this asset as a collateral to Jet Protocol

2 Likes

Dear Community Members:

Below we will detail the results of the Off-chain, community sentiment vote for the $DAI proposal. Along with this, we attach a summary of the CODEC evaluation that the $DAI asset has received from the Governance Committee.

We invite those users who have staked JET tokens to cast their vote in this On-Chain vote. Remember that in order to execute your vote you must have at least 1 (One) JET token deposited.

The $DAI On-Chain voting will be executed via the governance platform starting on 10/18/22 and will be live for the following 7 (Seven) days.

We appreciate your collaboration and invite you to participate in the upcoming proposals! For the latest information, visit our sites:

[Summary of CODEC Assessment ] - $DAI

The following summary exposes the key points from the $DAI Collateral Onboarding Domain Evaluation Criteria.

Overall, the Jet Governance Committee endorses $DAI to move forward with an On-Chain vote.

The full CODEC Evaluation Summary can be found here.

Click this link for the full version of the asset’s application.

Community Discussion Summary:

The community has shown interest and enthusiasm to take $DAI to the On-Chain stage.

Community Vote Summary:

The $DAI collateral sentiment off-chain community poll has concluded with a 100% favorable vote.

3 Likes

Hi @Kene_StableNode,

I’m just preparing for implementation of this proposal as the vote is concluding soon. I want to confirm which token we’re talking about. There are several wrapped DAI tokens on Solana.

  • The application references FYpdBuyAHSbdaAyD1sKkxyLWbAP8uUW9h6uvdhK74ij1.
  • The contract that seems to have the most liquidity is EjmyN6qEC1Tf1JxiG1ae7UTJhUxSwk1TCWNWqxWV4J6o. This is also the one that’s been onboarded by Solend.

In fact, Portal Token Bridge does not even recognise FYpdBuyAHSbdaAyD1sKkxyLWbAP8uUW9h6uvdhK74ij1.

I believe we should be onboarding EjmyN6qEC1Tf1JxiG1ae7UTJhUxSwk1TCWNWqxWV4J6o.

@Kene_StableNode @Bobby_StableNode @jrmoreau and others:

  • Please independently check which DAI token we should be onboarding.
  • If indeed we should be using a different token than contained in the application and presented for a vote, can we just proceed anyway?
1 Like

Thanks for the clarificaiton. We believe that the proposal that provides the most benefit to the Jet protocol should proceed. Therefore, as the liquidity is key to reduce risk and encourage participation, we agree with the following:

In terms of the next question:

As the proposal’s focus is to onboard Dai and that’s also what the governance voted on, we believe it’s still valid.

3 Likes

JetDAO Community members:

The On-Chain governance vote for $DAI has concluded.
We thank all those who have casted their vote and help both build Jet’s future and support the use of the asset.

With 100% of voting stakers “in favor” of JDAP-15, the vote has concluded to include $DAI as a collateral type in Jet starting at the next protocol update.

In case you want to review the $DAI application, community discussion, and CODEC Summary, please go to this link.

We look forward to your participation in the next governance vote!

2 Likes

Sweet, that makes sense to me. Moving ahead with onboarding of EjmyN6qEC1Tf1JxiG1ae7UTJhUxSwk1TCWNWqxWV4J6o DAI.

3 Likes