It was only a matter of time till MakerDAO joined the rollup revolution. But now, with ZK-Rollups. Here’s what it means for MakerDAO holders, governance and Vaults.
What's happening? MakerDAO will be live on StarkNet.
When? April 28.
MakerDAO is one of the blue-chips’ lending protocols on Ethereum.
His tokens? DAI and MKR.
DAI is known as an on-chain collateral stablecoin on Ethereum.
Borrowers pay collateral in exchange for freshly minted DAI tokens that are then burned as the borrower pays his outstanding loan.
MKR is the governance token in MakerDAO. Holders are rewarded but also are willing to slash out their tokens and sell them at open market in case of insolvency.
With Aave and Compound, MakerDAO is considered one of the blue chips of lending protocols.
What About StarkNet?
But, what about StarkNet? StarkNet is a ZK-Rollup Layer-2 solution. It uses a Zero-Knowledge (ZK) cryptographic proof to process transactions outside the Ethereum mainnet while benefiting from its security.
ZK-Rollups bundle transactions and process them off-chain. This means computation is processed outside the mainnet thus offering cheaper transactions.
StarkNet and MakerDAO? MakerDAO being able to process transactions outside the Ethereum mainnet, on a Layer-2 will be able to decrease transactions 10x.
More specifically, DAI and MakerDAO Vaults, where the very own DAI is minted and borrowers deposit collateral will be on StarkNet.
This will bring also lower DAI minting time from eight hours to minutes given StarkNet ZK-Rollup technology.
Great Power, Great Responsability
But as always, a great power comes with great responsability, rollups add another extra layer of complexity and risks by taking transactions outside the Ethereum mainnet.
The risks are higher as DAI minting will be happening off-chain, anyway, as it’s already happening but over optimistic rollups such as Optimism and Arbitrum.
Still, this is proof that DeFi products will not have a chance than to move to Ethereum L2s over time.
An interesting read form MakerDAO forum you may like:Â A Multichain Strategy and Roadmap for Maker
Yours truly,
The d-Learner