MakerDAO founder Rune Christensen announced on Twitter a major upgrade to the DAI stablecoin. In the future, the ecosystem will have two stablecoins: NewStable (name TBD) to comply with regulatory requirements, and PureDai (name TBD) to uphold the principles of decentralization.
The contradiction of stablecoins lies in their need to be pegged to the US dollar while maintaining decentralization. Achieving both on a large scale is challenging. The current challenge for DAI is to embrace decentralization without compromising compliance. The token’s nature does not meet the requirements for profitability through real-world assets (RWA) while remaining compliant.
To address this contradiction, Rune believes there are two paths to choose from. The first is prioritizing utility and scale by pegging to the US dollar and integrating with real-world assets. This requires integration with traditional finance (TradFi) and compliance with regulatory requirements.
The second path is to pursue pure decentralization, which requires an independent architecture and design that is not tied to centralized control. This path does not involve any connection to the real world or DAO.
Rune states that Maker will not choose one path but will pursue both. Instead of combining conflicting concepts into one stablecoin, Maker will create two stablecoins that serve different purposes.
The first stablecoin, NewStable (name TBD), will be the main successor to DAI. It will focus on ecosystem growth, scalability, and compliance. NewStable will integrate with RWAs and traditional finance-related businesses and will be optimized through decentralized governance processes to adapt to changing environments.
After a transition period of about a year, the savings rate (DSR) of DAI will gradually close, and profits will only be distributed to NewStable. NewStable will remain under the control of MakerDAO.
To ensure global expansion of NewStable, transfer freezing functionality will be introduced over time to comply with regulatory requirements. However, the implementation of this functionality will require governance approval and may take several months or even years, depending on the growth of NewStable.
The other stablecoin, PureDai (name TBD), will offer a return to the ideology of decentralization. It will only include purely decentralized collateral, such as ETH and stETH, and will not include more centralized assets like USDC. PureDai will have a freely floating reference price (not necessarily pegged to the US dollar) and a highly decentralized oracle mechanism that cannot be modified by any organization, including MakerDAO.
PureDai will be released in an immutable contract form to minimize legal compliance risks and uphold the principles of censorship resistance and decentralization. Once the contract is activated, PureDai will have no connection to Maker and will operate independently.
Existing DAI holders will have the option to upgrade to either NewStable or PureDai. They can also choose to continue using DAI, which will maintain its current status and remain pegged to the US dollar. Conversion between DAI, NewStable, and PureDai will be possible at a 1:1 ratio.
As most users and applications transition to NewStable or PureDai, DAI is expected to be phased out. The timing of this phase-out will depend on the adoption speed of NewStable and PureDai within the ecosystem.
More updates are expected in the coming weeks.