The decentralized stablecoin of Maker is coming to Cosmos after a collaboration with the cross-chain protocol Umee so let’s read more today in our latest cryptocurrency news.
After Terra’s $40 billion implosions a month ago, the Cosmos ecosystem is n the hunt for a new decentralized stablecoin. The team at Umee announced DAI will be filing the gap and the CEO Brent Xu added:
“The UST collapse made it absolutely clear that the Cosmos ecosystem needs a robust, safe stablecoin. Looking ahead, Umee’s broader mission includes creating cross-chain stablecoins and adding Cosmos assets to MakerDAO.”
Unlike Terra’s UST, DAI is an overcollateralized stablecoin with a market cap of $6.9 billion and it is still magnitudes smaller than the market leader Tether. In order to mint $1 of DAI you would have to deposit $1.74 in ETH and a host of other cryptocurrencies are also eligible to be used as collateral like Uniswap, Polygon, MAMTIC, and more. Each collateral asset carries its own minimum collateral ratio which dictates how much of the asset you would have to put up and mint DAI.
The data dashboard DAI stats shows that the most popular collateral for minting Maker’s stablecoin is circle’s USDC and the dominance drew criticism to DAI’s claims of being a decentralized stablecoin given how USDC is centralized. DAI is integrated in 20 different networks like Fantom, Solana, and Polygon so though users will be leveraging Gravity Bridge, the connector between EVM blockchains and Cosmos, Umee is much more than just a bridge pool:
“Other protocols use bridges to create wrapped assets—essentially a quantity of a blockchain’s native currency equivalent to the non-native asset. Umee is unlike these protocols. Instead of building a bridge, we allow users to lend and collateralize, without creating any additional wrapped assets, to get exposure and participate in another ecosystem.”
This means that umee is building a tool that will allow users to lend and borrow non-compatible cryptocurrencies and this idea earned the attention of a few investment groups as well. Last June, Umee landed $6.3 million in backing from Polychain and Coinbase Ventures.
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