Maker Teleport will make it possible to instantaneously move DAI directly between select Layer 2 networks.
Do you really own DAI?
If you aren’t on Ethereum or a handful of select Layer 2 blockchains, the answer is likely “no,” according to MakerDAO, the organization behind the fourth-largest stablecoin by market capitalization.
In a blog post published without much fanfare last week, MakerDAO detailed “canonical DAI” — “the one, true DAI,” according to Sam MacPherson, a member of the organization’s protocol engineering team.
“This is just sort of a first step in our phased rollout of the entire Maker protocol,” MacPherson told The Defiant. “Currently, we’re just on Ethereum, and it’s our goal to support all these chains where the users are. We want Maker to be usable by retail users that maybe can’t pay for the gas fees on Ethereum. … canonical DAI is just one of the steps we need to take to get there.”
Native DAI Support
Few protocols offer native support for DAI, a stablecoin backed largely by crypto assets but pegged to the U.S. dollar. When DAI is moved from Ethereum onto another blockchain, it must be “wrapped” — locked on Ethereum while a derivative token representing the original DAI is minted on the destination chain.
That wrapped DAI is less fungible, liquid and secure than the original — dubbed “canonical DAI” by MakerDAO.
“The main difference is that Maker governance has control over this token, whereas, on the wrapped version, we don’t,” MacPherson said.
Today, canonical DAI exists only on Ethereum and three Layer 2 networks: Optimism, Arbitrum and StarkNet. A governance proposal to add Arbitrum Nova to that list will soon go before holders of MKR, the DAO’s governance token, according to MacPherson.
“In the future, we will deploy the Maker protocol on these chains,” MacPherson continued, “so when that happens, we want canonical DAI in place because we need the ability to mint DAI on these chains.”
The longer they wait, the more of an issue it will become.
“Liquidity will build around this [wrapped] version of DAI that we don’t have control over,” he said. “We [will] have to migrate users from this wrapped DAI to canonical DAI. And it’s very confusing, right? If there are two versions of DAI, what does this mean to end users?”
Whether Maker will need to offer incentives to get users to swap their wrapped DAI for canonical DAI remains to be seen, he said, though Maker hopes the “more feature-rich” canonical version will be an attraction in and of itself.
Among those features is Maker Teleport, which will make it possible to instantaneously move DAI directly between select Layer 2 networks, according to MacPherson. The first version of that feature will likely be introduced in the coming weeks.
“If, say, you were to go through the normal route right now, from Optimism to Arbitrum, you would have to jump from Arbitrum to Ethereum and then to Optimism, and some of these messaging windows have a seven-day delay, so it’s completely undesirable,” he said. “With Maker Teleport, you can basically just hop to and from the source chain to the destination chain as fast as you want with high amounts of liquidity at low cost.”
The first version will allow for instantaneous withdrawals of DAI from an L2 to Ethereum. By year’s end, Maker hopes to have the fuller version available for users.
Tether’s USDT is the largest stablecoin by market capitalization, with a $66B market cap. USD Coin is second at $54B. Binance USD is a distant third at $17B, and DAI is fourth at $6.9B.