Rune Christensen, the founder of MakerDAO, announced that in a few years, the project will launch a fully decentralised alternative to the DAI stablecoin, tentatively named PureDai.
Reconciling the two opposing paths for Decentralized Stablecoins
From the moment Dai started scaling, it has been straddling two worlds.
One world is the culture of pure decentralization as introduced with Bitcoin. The other is the desire to fulfill the original purpose of Dai,…
— Rune (@RuneKek) May 15, 2024
The new asset will be deployed on the Ethereum network, but L2 protocols and cross-chain bridges will enable its transport to other blockchains.
The “stablecoin” mechanism includes:
- exclusively decentralised collateral like ETH or “liquid ether” stETH from Lido;
- a freely floating peg, similar to RAI;
- the use of highly decentralised oracles;
- no governance.
“From the moment DAI started scaling, it has been straddling two worlds. The first is the culture of pure decentralisation, as introduced by Bitcoin. The second is the desire to fulfil the original purpose of the coin, providing utility and value to a broad range of real people,” Christensen noted.
However, these concepts fundamentally contradict each other, according to the “Stablecoin Trilemma.” It states that simultaneously ensuring a peg, supporting pure decentralisation, and scaling is unattainable, the MakerDAO founder emphasised.
The resolution to these contradictions is intended to be a system of two stablecoins: MakerDAO and NewStable, introduced earlier.
The latter is expected to take on the primary functionality of DAI with a strict 1:1 peg to the dollar, collateralised including in RWA, and options for operation in regulated jurisdictions, such as freezing.
Users will be able to freely convert DAI to NewStable and back or upgrade the coins to PureDai.
Christensen anticipates that eventually, the two new coins will completely assume all the current functions of the project’s leading stablecoin.
Back in 2022, Christensen proposed detaching DAI from the dollar. Many in the crypto community considered such an idea excessively radical, expressing concerns for the project’s future.