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Monteluna
@monteluna
MakerDAO is a very strange thing, a credit protocol, that is also trying to act like a lending protocol. I feel like one can do one or the other, but not both well in eurodollar system. Its massively complex, yet still not even competing with wrapped eurodollars. https://x.com/ImperiumPaper/status/1803405670173007962?t=h7sUEqSeAzdeqK0sWCwlwA&s=19
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Sam MacPherson
@hexonaut
What's the difference? Stablecoins and lending are the same thing. It's just a question of how strong your liquidity guarantees are.
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Monteluna
@monteluna
I would say credit protocols and lending protocols differ because credit has to maintain par, so it has stricter requirements for collateral to meet those liquidity guarantees. It's very hard to grow a stablecoin, but totally fine to grow lending. My issue is MakerDAO fails at its base credit requirement as wrapped dollars that easily meet par requirements clearly have dominated. Bad money drives out good money.
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Sam MacPherson
@hexonaut
DAI started as being backed entirely by ETH which by your definition is a lending protocol. More recently backed by USDC and cash-like instruments. This happened in 2020 so what is the new development?
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Monteluna
@monteluna
Nothing really. Just my opinion that its almost impossible for me to see Dai compete in a world where wrapped Eurodollars exist. Par is nearly impossible to achieve for even USDC and Tether, and they exist at literal wrapped bank bucks. Achieving par has led to this complex mess of governance which is obviously weird for everyone and clearly is showing some non-optimality. BTW I enjoyed Dai, and am aware who you are. I just don't think Dai truly can compete today because the banking system is designed to be a cancer, and *will* deeply integrate into defi.
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Sam MacPherson
@hexonaut
To me it's a different product. Liquidity guarantees are a spectrum and sDAI sits in a practical middleground between high liquidity and maximum yield. The uniqueness comes from yield opps within DeFi. Maker can derisk these yields and forward to users. At the very least the RFR should go to users.
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Monteluna
@monteluna
I do agree there. Dai makes a lot of people money via DSR and Spark. I'm not anti-DAI BTW, I just recognize the cancerous speed of pure fiat and tokenized fiat.
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