MIR-17┃Add DAI as collateral on Mimo on Ethereum

Summary:

This proposal aims to add DAI as new collateral on Mimo on Ethereum.

Rationale:

The Maker Protocol is one of the largest dApp on the Ethereum blockchain.

It allows users to generate DAI by leveraging collateral assets approved by the Maker Governance.

DAI is designed to minimize price volatility. It is a decentralized, unbiased and collateral-backed cryptocurrency that is soft-pegged to the US Dollar.

Users generate DAI by depositing collateral assets into Maker Vaults within the Maker Protocol.

Each DAI in circulation is directly backed by excess collateral, meaning that the value of the collateral is higher than the value of the DAI debt.

To generate DAI, the Maker Protocol accepts as collateral any Ethereum-based asset that has been approved by MKR holders. MKR holders must also approve corresponding Risk Parameters for each accepted collateral.

With a supply of almost $5.4 billion in circulation, DAI is one of the most widely used dollar stablecoins in DeFi.

You can learn more about these mechanisms in their documentation / whitepaper.

Once the vote is accepted on Snapshot, we will determine the associated liquidation ratio, minimal collateral ratio, debt ceiling, liquidation bonus on a second MIR discussion.

Project Presentation:

Protocol name : Maker DAO Token requested : DAI Token contract address : https://etherscan.io/token/0x6b175474e89094c44da98b954eedeac495271d0f Audit(s) links : https://security.makerdao.com/audit-reports Chain requested : Ethereum Relation with the project : None. Website: https://makerdao.com/en/ Github: https://github.com/makerdao Twitter : https://twitter.com/fraxfinance Telegram: https://t.me/makerdaoOfficial

Token metrics & Risk assessment:

• Smart Contract risk: B+

All accepted collateral assets can be leveraged to generate DAI in the Maker Protocol through smart contracts called Maker Vaults. The smart contracts are known as Collateralized Debt Positions (CDPs) and the vaults are inherently non-custodial. DAI has generated more than 15,6M transactions on Ethereum.

• Counterparty risk: B+

Users interact with Vaults and the Maker Protocol directly, and each user has complete and independent control over their deposited collateral as long the value of that collateral doesn’t fall below the required minimum level (the Liquidation Ratio, discussed in detail below). There are currently 482k holders on Ethereum.

• Market Risk: B+

DAI on Ethereum has a $6,5B market cap. Furthermore the price is correlated to the USD and over-collateralized at 140%. For this reason, we consider the risks of DAI mitigated by his over-collateralized assets such as USDC, ETH, BTC, etc. which have the highest market capitalizations and trading volumes of the MRC-20 tokens. The liquidity available on Ethereum is nearly $2,2B with approximately $90M of volume per day on Ethereum.

Collateralization of the DAI and its different collaterals: https://daistats.com/

• Chain Risk : A

Ethereum had 0 outages over the last 6 months. (https://etherscan.com/chart/blocks)

• Liquidity Risk of PAR on Ethereum: A-

The PAR-USDC UniV3 pool has 1,68M$ in concentrated liquidity, composed of 50% PAR and 50% USDC. The PAR-USDC Curve pool has 425k$ in liquidity, composed of 52,1% PAR and 47,9% USDC at the time of writing. The MIMO-PAR Balancer pool has 310k$ in liquidity, composed of 80% MIMO and 20% PAR.

This provides the following price impact on the following trade sizes:

1000 USDC → PAR: 0.00% 10000 USDC → PAR: 0.03% 25000 USDC → PAR: 0.07% 50000 USDC → PAR: 0.14%

• Overall Risk : B+

The Overall Risk is the average of the points mentioned above.

• Community size :

Twitter: 229,3k followers Telegram: 14,5k members

Means:

• Human resources: Multisig DAO signers will need to sign and execute transactions to add DAI as collateral on Mimo.
• Treasury resources: There is no cost for the treasury to add DAI on Mimo Ethereum.

Technical implementation:

1. Add DAI in the ConfigProvider Contract with all parameters decided by the Mimo governance.
2. Set the chainlink oracle related to the DAI: DAI/USD into PriceFeed Contract

Voting options:

• Add DAI as new collateral on Mimo on Ethereum
• Against adding DAI as new collateral on Mimo on Ethereum
• Abstain

Authors: @starny & @JeanBrasse from Mimo Labs