Expansion of collateral assets and upgrading liquidation engine to be done by MakerDAO soon.

Expansion of collateral assets and upgrading liquidation engine to be done by MakerDAO

Governance voting has been opened by MakerDAO to allow new tokens as collateral. MakerDAO is a decentralized lending and stablecoin protocol.

In order to increase the number of digital assets that can be used to mint its stablecoin, DAI, a number of new collaterals types have been proposed to MakerDAO. The voting that started in April 19, will be active for 14 days.

Moss Carbon Credit (MCO2), Rocket Pool’s staked Ethereum (rETH), the 1inch decentralized exchange token (1INCH), and the BadgerDAO Sett token (bBADGER), SushiSwap’s DAI/USDC LP token, Uniswap’s DAI-PAX LP token, and Uniswap’s GUSD-DAI LP token, are the seven liquidity providers that are being voted as prospective collateral.

The MakerDAO community is also conducting a governance vote on a proposed upgrade to its liquidation system, dubbed MIP-45. Liquidations are executed by Maker to maintain DAI’s peg to the U.S. dollar by ensuring that all stable tokens generated using Maker’s vaults are sufficiently backed by collateral, the ratio of which varies depending on the asset.

The protocol has been working on an upgrade for the past year in response to the ‘Black Thursday crash in March 2020 that saw millions worth of users’ collateral liquidated after the price of Ethereum crashed by roughly 50% in 30 hours.

Maker describes the new liquidation engine as increasing the predictability and security of the protocol:

“Functionally, the new Liquidations system will provide greater security, predictability, and decentralization, facilitating wider participation by the Maker community and DeFi sector as a whole.”

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