KNC and ZRX have been added to the Maker Protocol.
Both can now be used to generate #Dai.
— Maker (@MakerDAO) June 28, 2020
Following Governance Polls ratified through an Executive Poll, Kyber Network‘s KNC and 0x Protocol‘s ZRX can now be used as collateral to mint new Dai with a 4% Risk Premium, 175% Liquidation Ratio and 5 million Dai respective debt ceilings. At the time of writing, ~264,000 KNC has been locked in Vaults, accounting for 80,000 new DAI or roughly 60% of the total amount of DAI which has been minted using BAT as collateral.
While this marks a huge signal not only for KNC and ZRX but DeFi tokens as a whole, it is worth noting that the integration was far more conservative than the parameters for BAT – the first ERC20 token added as collateral following the release of Multi-Collateral Dai.
Boasting a 0% Risk Premium and a 150% Liquidation Ratio, BAT farmers are surely basking in favorable terms for the latest COMP crop rotation. While BAT does have a lower debt ceiling at 3M (compared to 5M for KNC and ZRX) it is interesting to consider how BAT’s grandfathering into Maker has given it more favorable parameters than two of those highly respected DeFi tokens on the market.
With the upcoming launch of Katalyst for Kyber and Matcha for 0x Protocol, the integration into Maker solidifies these two assets as a backbone of the DeFi basket, many of which are sure to follow suit within the greater vision for Multi-Collateral Dai. Similarly, now that KNC has been supported in Maker, we expect other leading protocols like Compound to keep a close eye on it for their next asset integration.
KNC is money.
— Arthur👨🌾🌽⚔ (@Arthur_0x) June 28, 2020
In the coming weeks, it’s will be interesting how KNC stimulates Dai growth with the assumption that many are likely to stake their holdings via the KyberDAO to earn ETH rewards using tools like the Kyber Community Pool.
Base Rates Signal Growth
Baked into this Executive Poll is the introduction of new base rates, mainly signaled by the reintroduction of Stability Fees on popular collateral types like ETH (0.25%) and step-ups on WBTC (1.25%). While the Dai Savings Rate is still set at 0%, this proposal allows it to be bumped up to 0.25% – a sign that Maker has largely recovered from the turmoil of Black Thursday.
We expect that with the reintroduction of Stability Fees (while modest) MKR holders are excited to see protocol fees beginning to accrue again following a nearly 4-month drought.
We can only assume that these new proposals were fueled in part by Maker being dethroned by Compound for the #1 spot on the DeFi Pulse leaderboard.
The yield farming saga continues 🌾 pic.twitter.com/TlEqI0VaZi
— DeFi Rate (@DefiRate) June 20, 2020
Seeing as COMP helped Compound skyrocket to over $1B in supplied assets, many have quickly pitted the two DeFi giants against one another in the ever-growing liquidity wars. To this end, the introduction of new collateral comes as a strong signal that Maker will be ramping up their roadmap to introduce a plethora of community-favored assets in the near future.
If one thing is for sure, the time to borrow DAI with less than a 1% Stability Fee to take advantage of DeFi’s endless yield farming opportunities is sure to come to an end sooner or later.
To borrow against KNC, ZRX or any of Maker’s supported collateral, head over to Oasis Borrow today.
In the meantime, be sure to stay up on all things Maker on Twitter.
Cooper is the Editor of DeFi Rate. He is an ambassador of Set Protocol and an active contributor to MetaCartel where he seeks to find emerging consumer-facing applications that propel the Ethereum ecosystem. He often works with projects as the Director of Fitzner Blockchain Consulting where he coauthors the weekly publication Token Tuesdays.
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