Dawn of the New Financial System Starting with MakerDAO’s DAI Token

Asia Blockchain Review
September 11, 2019

DeFi is taking the world of finance by a storm with its endless possibilities that are transforming the way people interact with financial institutions and make transactions.

For the third interview of our monthly spotlight on DeFi, Asia Blockchain Review spoke to Gustav Arentoft from MakerDAO, a leading project in the DeFi space with its issuance of the USD-pegged stablecoin DAI. Arentoft is responsible for leading European business development, setting up partnerships and ecosystem support for MakerDAO while also leading projects in Asia and Africa.

Here, he discusses the company’s role in providing stability for open finance protocols and multi-collateral DAI, offering users an alternative to centralized finance, and its latest roadshow in Berlin.

Asia Blockchain Review: What was the inspiration for MakerDAO and what is its ultimate aim?

Gustav Arentoft: To create an open, equal and fair financial system. The current system is biased against things such as religion, origin, current location and race. These things shouldn’t be taken into account when looking at asset-backed issuance of credit. We believe that finance and stability should be a public good, and that is our mission to push to the world. 

MakerDAO is using the smart contract set-up powered by Ethereum to eliminate middlemen in regards to financial transactions. We allow users to post collateral in our system and take a line of credit against that collateral. On a technical level, every time a user takes credit against our contracts they actually print Dai themselves. 


ABR: DAI is a USD-pegged stablecoin. Could you tell us how it differs from Tether, another stablecoin pegged to the greenback?

GA: Dai is a completely decentralized and overcollateralized stablecoin. In contrast to Tether, we are also not tied to political or jurisdictional issues but are completely separated from any of those things. For example; we currently have 94,100 individual positions with Dai issued against collateral. That means for anyone to shut our system down, they would need to close 94,100 individual positions from all over the world. Comparing this to Tether, which uses an escrow model with a single bank account to shut down; we don’t have that central point of failure. 

ABR: MakerDAO is counted among the top-of-mind projects in Decentralized Finance (DeFi). Do you see yourself as playing a leading role in the DeFi space? Do you have any ambitions for the ecosystem as a whole?

GA: Yes, I think one of the reasons we are a market leader within DeFi is that we are the only viable option for stability on these open finance protocols. We are the default project to use for lending and borrowing with the need for stability. We are also very ambitious and we hope to be able to allow people from outside the space to access and benefit from the services developed in it. We work with all the major projects and have good relations with every one of them. We see it a lot like a collaborative effort. 


ABR: Could you explain multi-collateral DAI and when we can expect it to launch?

GA: Multi-collateral Dai (MCD) is the full version of the credit issuance of MakerDAO. We will switch away from the model we are currently using, where we are backed only by Ethereum, and move to a model where Dai will be backed by a basket of assets. We are also looking into things such as other crypto tokens, commodities, and tokenized securities, including bonds and stocks. 


ABR: Voters determine which tokens are added as collateral for the system, and for the first round, you listed 7 tokens – (Augur (REP), Basic Attention Token (BAT), DigixDAO (DGD), Ether (ETH), Golem (GNT), OmiseGo (OMG), 0x (ZRX). What were the reasons for choosing these coins? 

GA: These tokens were some of the top ERC20 tokens in the space when our tech team started testing out MCD a long time ago. Tokens will fit into MCD via an adapter so it fits into our smart contracts. The adapters are already built for these tokens and are therefore technically compatible with the smart contracts. However, they still need to pass the governance process for them to enter the MCD asset pool. 

ABR: 2% of all Ethereum is currently locked in MakerDAO smart contracts. What do you think has contributed to such strong growth for the company?

GA: One of the beautiful things about having these decentralized protocols is that they come with complete transparency. You can always check how much Ether there is in our smart contracts at any given moment at MKR.tools. 


ABR: Do you think DeFi will become the next standard of the financial sphere? How can DeFi change the paradigm of the traditional financial market?

GA: I think talking about the standard of finance is a difficult question. We hope to be able to offer an alternative, which can add value to people in certain situations. However, some situations will most likely still be best serviced with centralized finance. The goal for us is to create an alternative. 


ABR: MakerDAO is currently planning a series of events in Berlin, namely the 101 DeFi meetup, DAI Dappy Hour ~Berlin Edition, Dappcon Berlin, and the ETHBerlin hackathon. What do you hope to achieve there? The United States has seen the emergence of many DeFi projects, but have there been similar moves in the EU as well?

GA: Berlin is the European hub for decentralized protocols and there is a lot of activity there. We’ve had great success with completely oversubscribed events and a lot of interest in us there. We also know and work on projects with most of the major players from the city. We did an awesome meetup at Room 77, which is a famous bar that became the first retail place in the world to accept cryptocurrencies. We were massively oversubscribed (like 300%) and saw a turnout of more than 200 people. 

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