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The transfer of MKR token control from it to the Maker governance community is now complete. The MKR token contract is now 100% in control of MKR holders. With MKR holders now in full control of that contract, decentralized governance is the only avenue for changing MKR token authorizations.

"Even though this particular crisis could not have been foreseen, there are steps that the Maker team could have taken to prepare for these unknown unknowns. This situation, while still actively developing, highlights that those teams who design DeFi networks cannot treat economic and governance design as "optional future TBDs." They must proactively consider all possible (covarying) risks, assuming that users will behave in their own best interests, and make it a priority to implement governance systems that are robust to these sorts of crises."

Sales at this auction take a reverse-auction format, with a fixed bidding amount of 50,000 DAI placed for an initial lot of 250 MKR tokens. Bidders can then lower the amount of MKR that they would be prepared to accept for the bid, but with a minimum decrease of 3%. Each lot will continue until one of two thresholds is crossed: either 6 hours passing since the last bid, or 72 hours passing since the first bid.

To restore Dai's $1 peg, negative interest rates may be necessary. But apparently ‪@MakerDAO‬'s current code-base doesn't allow for negative numbers. Better get coding, quick!

MakerDAO has launched the multi-collateral version of its DAI stablecoin. But despite the rapid growth of the sector and the diversification of assets involved, DeFi is still influenced by a handful of central players: Namely, Polychain Capital, a16z, 1confirmation, and unknown MKR whales. With governance decisions largely influenced by those with the largest stakes to lose, some crypto veterans are pushing for a closer examination of MakerDAO's marketing directives.

Booming demand for stablecoins in DeFi's yield farming landscape is breaking DAI's U.S. dollar peg. MakerDAO's DAI, which uses Ethereum and other stablecoins as collateral to maintain the peg, is trading above its targeted peg, has been consistently trading above $1 since mid-March. The community responded by setting all rates to zero, but the demand for DAI is so extreme that even these zero rates don't make a difference. MakerDAO's community is debating some tweaks to its monetary policy to restore the peg, though Maker's creator believes the only long-term solution is adding additional, varied collateral to the DAO.

Tether (USDT), with a market cap surpassing $16 billion, continues to hold the lion's share of stablecoins in circulation, but two smaller rivals are trouncing it in crypto's hottest market this year, decentralized finance (DeFi). Measured by the total value locked in six of the most popular DeFi protocols - Compound, Maker, Uniswap, Curve, Aave and Balancer - USD coin (USDC) is in the lead among stablecoins followed by dai (DAI), the native stablecoin to MakerDAO. USDC and DAI have market caps of $2.74 billion and $608 million, respectively.

Aave currently comprises the largest DeFi project, with $1.51 billion locked, followed by MakerDAO with $1.42 billion, Curve Finance with $1.15 billion, yEarn Finance with $845 million, Synthetic with $851 million and Compound representing $797 million.

"For now, MakerDAO remains the premier decentralized stablecoin with over-collateralized crypto reserves backing the DAI stablecoin. The race to develop the first under-collateralized stablecoins remains to be won as projects like USDN on the Near Protocol or Frax Share on Ethereum gain popularity."

"The crisis that has engulfed crypto in the last year is a crisis of fractional reserve banking. Silvergate Bank and Signature Bank NY were fractional reserve banks. So too were Celsius Network, Voyager, BlockFi, Babel Finance and FTX. And still standing are the crypto fractional reserve banks Coinbase, Gemini, Binance, Nexo, MakerDAO, Tether, Circle, and, I would argue, every one of the DeFi staking pools. All of these are doing some variety of fractional reserve banking. Custodia Bank and Kraken Finance claim to be full-reserve banks - but 100% reserve backing for deposits is both hard to prove and not a guarantee of safety. What do I mean by "fractional reserve banking"? My definition might surprise you. For me, fractional reserve banking simply means that the composition of a bank's assets is less liquid than that of its liabilities."

DeFi (decentralized finance) encompasses anything that provides loans, borrowing, staking or some reward to the user for putting in capital to the system. It removes all the layers of intermediaries and middlemen that would normally be involved through the use of smart contracts. The DeFi space remains heavily reliant on the Ethereum blockchain (which has famously struggled to scale to onboard mass users). However, once Ethereum transitions to ETH 2.0 using the Proof of Stake consensus mechanism, the number of users it can onboard will be potentially without limitation. Moreover, other serious contenders are further building out the space, such as Compound, and Maker DAO, propelling DeFi to more and more users.

What made the original version of dai so transgressive was its ability to recreate the dollar out of entirely censorship-resistant material. The new version of dai no longer relies solely on censorship-resistant material. But perhaps this new version is even more transgressive. It has secretly docked itself to the Federal Reserve by using USDC stablecoins as a bridging mechanism.

An article by Circle Chief Economist Gordon Liao distinguishes stablecoins' use in trading versus payment activities and their impact on financial stability. Payment stablecoins like Circle's USDC have lower speculation exposure than trading stablecoins like Tether's USDT, MakerDAO's DAI, and Binance's BUSD. Two measures are presented as evidence; the total crypto trading volume facilitated by the stablecoin in question versus the amount of it in circulation, and the correlation between the change in stablecoin circulation and crypto-asset returns. Dai shows the highest correlation with crypto-asset returns because it is collateralized with crypto-assets, so a decrease in the asset collateral's value can prompt the forced redemption of the stablecoin.