MakerDAO-Aave Debacle: Collateralizing DAI and Risk Management

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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.

In this episode, the Blockworks research team examines Solana's transaction failures and the network's ongoing struggles to handle high transaction volumes. The conversation then turns to the MakerDAO and Aave debacle, debating the risks and merits of MakerDAO's decision to collateralize DAI with Ethena's stablecoin. They also touch on the recent default on Goldfinch and the broader challenges facing on-chain private credit markets. Finally, they explore the rise of Pump.Fun and the resurgence of meme coins.

As always remember this podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice.

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https://x.com/_nishil_/status/1777048334664081548

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Timestamps:

(0:00) Introduction

(1:08) Enabling Arbitrum Stylus

(5:08) Velodrome DEX on Bitcoin

(7:40) Solana & SUI Airdrops

(13:39) dYdX Permissionless Smart Contracts

(18:15) dYdX Segment: Axelar

(22:53) Solana Transaction Failures

(31:57) Aave & MakerDAO Debacle

(43:37) Goldfinch Default

(51:43) Pump.Fun Meme Infrastructure

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Disclaimer: Nothing said on 0xResearch is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Dan, Sam, and our guests may hold positions in the companies, funds, or projects discussed.