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In the future, billions of Dai will be needed to maintain Maker’s current value

May 7, 2020

Cryptanalyst AlfaBlok has released a report claiming this The number of Dai in circulation needs to be increased by more than 70% each year for MakerDAO (MKR) to maintain its current capitalization of around $ 350 million.

According to the AlfaBlok model released on May 5th Dai’s offer will have to exceed several trillion by 2040, above the current supply of approximately 100 million.

Analysts said they did “a basic analysis of this decentralized business based on discounted revenue streams” and concluded:

“The bottom line is that the current valuation implies very aggressive growth rates of over 70% + an increased Dai circulation per year to reach the trillion Dai in circulation so that the current valuation makes sense.”

DAI will need billions

In the future, billions of Dai will be needed to maintain Maker’s current valueIn the future, billions of Dai will be needed to maintain Maker’s current value

AlfaBlock said this is possible but difficult:

“So far, Dai’s request has clearly been there. So much so that it has been difficult to keep the association close to USD 1. The big challenge continues to be to increase the supply in a structural way that will enable it to come in the coming To reach hundreds of billions of Dai in circulation for decades. “

In order to get an up-to-date offer, AlfaBlk speculates that the tokenized properties may have to become an accepted form of collateral.

“There are now over 170 billion properties worldwide, and this should be mechanically feasible,” the report said.

As alternative The report analyzes the possibility that the protocol will disconnect and operate with insufficient collateral.

Undercolralization

MakerDAO is the decentralized financial protocol that Stablecoin Dai (DAI) generates.

DAIs are created when a user makes deposits. DAIs are created when a user deposits Ethereum (ETH), Basic Attention Token (BAT), USD Coin (USDC) or Wrapped Bitcoin (WBTC) in a Maker Smart contract.

The deposited funds are placed in a secured debt position known as a “vault”, where the DAI total is the sum of the deposited crypto-assets minus a maintenance margin.. Users can earn interest or borrow money from their vault.

Secured cryptocurrencies are only available after the corresponding Dai have been redeemed and destroyedand can be auctioned to recapitalize the maker system if its value is less than the outstanding loan.

AlfaBlock concluded the report stating that Maker is breaking new ground for DeFi projects:

“MakerDAO is a very important project for DeFi: It is not only a critical part of Lego, but also a model for how organizations that are based on DeFi DAO can work. We will all learn a lot about how it will all develop. “

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