Multi Collateral DAI Launches Today, Here’s what you need to Know

The much-awaited integration of Multi Collateral DAI (MCD) is finally upon us. As the clock counts down, projects across Ethereum’s DeFi stack are gearing up to support their favorite stablecoin. Amongst the known integrators are Compound, dYdX, Request Network, and almost every major exchange (Coinbase and Bitfinex) that lists DAI, November 18, 2019.

What to Expect

The most important changes are from a branding perspective. For example, what we call used to call DAI will now be SAI. The ticker ‘DAI’ will be used for the new version being rolled out later today.

For a basic primer, SAI is backed by only ETH collateral, whole DAI will be backed by a variety of assets, initially starting with just ETH and Basic Attention Token (BAT).

The plan is to Migrate SAI into DAI using Maker’s native migration portal and there are certain hindrances to this process. It cannot go too slow or too fast; the robustness of migration hinges on keeping the speed of migration at an optimal level.

Exchanges support for this move plus broad community support indicates that this is by no means contentious. There is obviously a minority of “ETH purists” who believe nothing else should be used as collateral, but the drawbacks of such a system are plentiful over the long term.

In short, Multi Collateral DAI is receiving a warm welcome from small DeFi projects and multi-billion dollar exchanges.

The Long Term Implications

As with any changes to existing infrastructure, Multi Collateral DAI also has its fair share of confusion. In the short term, it will be difficult to explain to newcomers who just learned what DAI is and how Maker Protocol functions, that everything they know has been flipped upside down.

But this is a situation of confusion that is worth bearing given the long term effect MCD will have. Integrating ERC-20 tokens is just the beginning. The goal is to have a variety of crypto assets and real-world assets used on an overcollateralized, liquid, and tokenized system.

The bigger picture of MCD lies within the tokenization of real-world assets and using those tokens to obtain stable and liquid funding for short term needs.

As Rune Christensen founder of Maker said, Maker is looking to challenge the traditional financial market rather than continue to operate as niche financial protocol.