MakerDAO moves to expand collateral assets and upgrade liquidation engine
Decentralized lending protocol MakerDAO has opened governance voting to allow new tokens as collateral.
Several collateral types have been proposed for MakerDAO, increment in the number of digital assets that can now be used to mint its stablecoin, DAI. Voting started on April 19 and will run for the next fourteen days.
Total of seven tokens have been suggested as collateral for the Maker, including Moss Carbon Credit (MCO2), Rocket Pool’s staked Ethereum (rETH), the 1inch decentralized exchange token (1INCH), and BadgerDAO Sett token (bBADGER).
Major LP tokens are also being voted as prospective collateral including SushiSwap’s DAI/USDC, Uniswap’s DAI-PAX, and Uniswap’s GUSD-DAI.
Alongside, the MakerDAO community is also organizing a governance voting on a proposed upgrade to its liquidation system. Liquidations are executed by Maker to maintain DAI pegged to the U.S. dollar by ensuring that all stablecoins generated using Maker’s vaults are backed by the collateral.
The protocol has been working on an upgrade for the past year in response to the collateral liquidated after Ether price crashed by roughly 50% within 30 hours last year. In the upgrade, several modifications will be integrated to its smart contracts including an increase of the ‘Emergency Shutdown Threshold’ from 50K to 75K MKR.
The proposed upgradation also includes improvements in auction model for the liquidation of vault collateral, DeFi aggregator integration for greater competition between bidders, and more access to market’s liquidity and flash loan support.