MakerDAO and Wyre Answer Community Questions About New Partnership

On August 14, CEO of MakerDAO Rune Christensen and CEO of Wyre Michael Dunworth entered into a partnership, in which Dai, MakerDAO’s stablecoin, was made available to be converted from fiat on Wyre, a blockchain platform that facilitates international money transfers. To further bring their communities together, and to make sure everyone was on the same page, the 2 CEOs decided to hold a Reddit AMA for their followers.

Questions from the community ran the gamut of very practical, as the person who asked about the fees for DAI/USD exchange (1:1 exchange rate, with 0.25% fees), to a very in-depth criticism about the level of risk certain inactive MKR holders are taking on (which was less satisfactorily resolved).

Here is the link to the full AMA, but we have summarized the highlights, so keep reading!

Who Will Hold the Reins?

Understandably, a lot of concern was expressed regarding access and control. One user wondered whether Wyre would control who can access their API. Dunworth assured them that yes, they would. He described it:

Think of someone under the hood of brokerages, exchanges, or fintech apps. They basically onboard with us as a company, and build it into their platform.

And, since Wyre is a hosted wallet solution, they won’t have any access to your personal wallets.

Clarifying the Nature of Dai

One question was asked about the Dai coin, and whether it is able to be “de-pegged” from fiat currency, say, in the event of a global financial crisis. Christensen responded that for now, Dai will continue to be pegged to the USD, the most commonly used fiat currency. But he states:

However it has always been the plan that the core stability function of Dai should eventually become independent from USD and instead represent pure stability in terms of consumer prices – a CPI basket.

In the future, he foresees Dai becoming pegged to CPI, which theoretically should provide economic stability through a widespread collapse of fiat currencies. However, creating a CPI basket is too difficult presently, and it will be many years before developers are able to create the framework to achieve that.

One user asked about the demand for Dai, and what made transferring Dai over Wyre better than simply transferring fiat currency. Christensen responded that together Dai and Wyre seamlessly blend money transferring solutions for both the blockchain-literate and small businesses who aren’t as well-versed. Plus, the ability to transfer DAI enables operating a small business without holding a bank account, which means bypassing heavy fees and bureaucracy.

Practical Matters

Understandably, a few investors had questions about how to get started trading Dai on Wyre, what the fees would be like, and what KYC requirements there would be.

Essentially, KYC requirements for a Wyre account include verification of name, phone number, address, passport, bank account, and social media.

When asked when MakerDAO would add hardware wallet support to the Dai dashboard, Christensten assured that a complete overhaul of the Dai dashboard is in its final phases of testing, and should be ready for release in the near future. It will include improved UX and UI, design and graphics upgrades, and support for a hardware wallet.

When asked about what exchanges are offering a DAI/ETH pair, he stated that getting both MKR and DAI on all major exchanges will be the Maker team’s top priority in 2019. He also stated that a MKR burn is scheduled to happen soon, with 30 MKR due to be burned once the engineers have the time to enact it. With the stability fee now 2.5%, and with 50 million Dai outstanding, this equates to $1.25 million per year, which should increase demand for MKR.

Black Swan Events

One user had a concern to air with Christensen with regards to “Black Swan Events,” which they described as “events caused by actors that can profit by creating risk that they don’t have to bear.” Essentially, this user was concerned that MakerDAO’s use of scientific governance rather than market-based algorithms enables idle holders of MKR to stake their tokens in such a way that would create artificially high risk in the market, which they themselves would not bear the brunt of should a mass liquidation occur.

This user also suggests that debt ceilings should be directly proportional to the value of the MKR staked to back them. They state that active MKR holders and MakerDAO’s Risk Team should have the same incentive to eliminate any insider trading going on.

Christensen responded that he was intrigued by the concept of using staking as a governance tactic, and is in favor of the idea of using MKR polling and bets to inform risk assessment. He admits that, while an open market is the best litmus test of risk, it is best to have a team of experts to “sanity check” its behavior. He sums up: “Trust but verify.”

Another user referenced “predatory short-term lending,” suggesting that Maker look into lending fiat through their CDP/DAI system. Christensen said that that is something they are looking forward to implementing, especially as it’s very cheap and easy to send ETH to the platform in exchange for temporary USD – essentially, a system for pawning your crypto. Obviously, they would have to research to see if this business model is regulation compliant before moving forward.

Thoughts on Other Projects in the Blockchain Space

One user asked Christensen what he was most surprised by, since going live on the mainnet. Christensen responded:

How crafty the Ethereum community is when you give them something to play with. Not long after Dai was live we started noticing several people who are using incredibly complex proxy contract setups to arbitrage dai liquidations with the oasisdex order book.

When asked what Ethereum projects they were excited about, both Christensen and Dunworth had a lot to say. In Dunworth’s opinion:

I’m super excited for Republic Protocol. Those guys are rockstars, and definitely excited for what’s possible mixing all things together! Not for collateral, but definitely find that interesting. Market Protocol is another exciting one… […] All the trading types are cool to watch… AirSwap/0x/IDEX/Kyber/Altcoin/Dharma/DyDx

Christensen referenced Augur and OmiseGO, as well as Dether, a platform that MakerDAO is partnering with to enable instantaneous and transparent donations to crisis zones, through Project Bifrost.

Conclusion

Overall, the 2 CEOs came across as very enthusiastic and accommodating people, highly open to any feedback and advice for directions to take their partnership in. Dunworth even, on being asked about using Wyre to send remittances from Argentina to Venezuela, contacted the owner of the Argentinian exchange Ripio to talk shop. And when one user pointed out a discrepancy in the display of exchange rates between DAI and USD, he immediately flagged it to his engineers.

And both projects seem to have a lot of confidence in each other, which bodes well for their partnership moving forward. Dunworth even stated that he’s “bullish on DAI,” and that the “Maker team have been really awesome in general with everything along the way.”

Actually, both CEOs had a lot of positive things to say about blockchain projects across the board, not just each other. Clearly there is a lot of enthusiasm in what they’re aiming to accomplish, and there was a lot of valuable back-and-forth in the comments that we just weren’t able to fit in this article. So if you’re interested in either one of these projects, it’s definitely worthwhile checking out the AMA for yourself.

Related: What is a Stable Coin and Does the Crypto Market Need Them?