Gold tokens: the next collateral in Multi-Collateral DAI

Most cryptocurrencies have lost more than 40% of their value over the past few weeks, and DAI, backed mostly by ETH, took the hit with them. On 12 March, vaults worth $8.32M were liquidated for 0 DAI, leaving the protocol about 5.67M DAI short.

The MakerDAO community responded quickly. It adjusted re-capitalization, added collateral, lowered the stability fee and changed debt ceilings, and it emergency-onboarded USDC as the third collateral type.

Maker is healthy again. But does crypto collateral hold up during a Black Swan event?

Gold is the classic safe haven, and its volatility is limited. With a liquidation ratio of around 125%, a gold-backed vault gives its owner time to react: during the 2008 financial crisis, gold fell about 29.5% over seven months. That is slow enough to add collateral and avoid Maker's 13% liquidation penalty.

There are more than 20 gold tokens, and some of them are scams. Choosing one should come down to transparency, trust and a community vote.

Gold tokens are centralized assets. But USDC's approval has already opened the door for them.

Topics: [0]makerdao[1]stablecoins[2]rwa[3]defi