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The MakerDAO-Aave Debacle: Risks and Rewards of Collateralizing DAI | Analyst Round Table

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MakerDAO-Aave Debacle: Collateralizing DAI and Risk Management

This chapter explores the controversy surrounding MakerDAO's proposal to collateralize DAI with SUSD, the implications on governance and competition with Aave, and the challenges of risk management in DeFi. It highlights the risks and rewards of collateralizing DAI, potential game theoretical scenarios, and strategies for mitigating risks such as diversification of exchanges and custody providers. The discussion also delves into the growth and management of the insurance fund in light of increasing funding rates and debates the adequacy of capital threshold for stability.

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