Fundamentally: The perfect asset to back DAI
DAI is intended to be a trustless and neutral form of currency on the Ethereum Mainnet whose price is tied to $1 US. A stablecoin. In this way, DAI is better/safer than USDC and Tether because while those assets have trustful central custodians (banks), DAI is managed only by smart contracts and decentralized price oracles.
However, there is a demon lurking under the surface: Over 51% of the assets that are collateralized and backing DAI_v2 are centralized trustful assets including USDC and WBTC which are IOUs offered by centralized banks.
This is a real problem because it means that DAI is largely backed by the collateral of central banks. This is further a real problem because most of DeFi relies on DAI, thereby indirectly at the mercy of Central Banks: Coinbase (USDC) and BitGo (WBTC).
There are ways to solve this problem and to make DAI neutral and trustless. We can encourage the use of neutral and trustless assets to back DAI with staking rewards. I am looking at YOU Maker Dao. What are the fundamentally perfect trustless assets for this task? The assets should be:
- Trustless — No central custodian or multi-sig contracts are used for distribution or supply management
- Neutral — No central service, team or application should back or support the assets since those can fail [the asset should be structured like BTC or ETH ideally]
- There should be multiple assets which are not price-correlated
There is one asset that is not being utilized by Maker DAO to collateralize DAI but it is fundamentally an ideal asset for this purpose: the largest trustless pure-mined ERC20 token, 0xBTC.
Since 0xBTC is pure mined, it is trustless and neutral with no dependencies. It is invulnerable from failure of any central team, service, or organization. It relies on no central banks. Its price is not strongly correlated with any other asset, meaning that it strengthens the diverse basket of assets with no risk.
In an ideal world, DAI would be backed by ETH, 0xBTC, and other neutral trustless native tokens. That way, it would not be at the mercy of central banks or centralized services but it would instead be a truly decentralized, neutral and trustless asset in its own right.
The Mineable Tokens punk