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Driving the industry of tokenization – PART ONE

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– An interview in three parts with founder and CEO of Maker, Rune Christensen

On 18 November, Maker DAO launched its long-awaited Multi Collateral Dai (MCD). In this comprehensive interview in three parts founder and of Maker, Rune Christensen, explains why MCD is not only a next-level stable coin system but is likely also to become one of the most important drivers for the tokenization industry.

Click to read PART TWO and PART THREE

MCD in a greater context

In this Part One, Rune Christensen explains why Multi Collateral Dai (MCD) is anticipated as essential news by the large Maker community. And how MCD opens up for integrating decentralised finance with the real world through the use of real-world assets as collateral into Multi Collateral Dai.

Michael Juul Rugaard (MJR): Congratulations on the launch of Multi Collateral Dai (MCD). How big is this for you personally and Maker and your large community?

Rune Christensen (RC): Thanks…Well, it is incredible that our team managed to pull off this project because what we have launched now is precisely what we first set out to build five years ago when the Maker first started before the Ethereum blockchain had even launched. And to finally see the moment where we were able to launch the whole thing was amazing. So, I am just really proud and excited about the fact that we now have an organisation and a team capable of operating on the level where we can perform this kind of smooth launch.

MJR: What kind of reactions have you received so far from the community?

RC: The fact that we actually launched made a lot of people very happy, and the reaction has been very positive. And I think this made people realise just how powerful the Maker Foundation team is now and how we can execute on things. But this is only the beginning, right! Launching Multi Collateral Dai is the start of a new chapter for Maker where we can start building on top of the Maker protocol and really grow the ecosystem.

Rune Christensen

MJR: Very cool! But let’s go back a little bit and try to explain to people who do not know Maker that much what we are talking about here. What is Multi Collateral Dai, why is it so important, and how is it different from the Dai that we have known up until now?

RC: Right, so the goal of Maker is to create an unbiased world currency with low fees and access for everyone. The first version of the system called single collateral Dai launched two years ago, and with that system, we have already proven that you can create a decentralised stablecoin without requiring an authority to control the system.  You can actually maintain the stability, and you can create a very diverse ecosystem around it, which is what happened with DeFi – the decentralised finance movement built on top of Dai.

Where we are going next with Multi Collateral Dai is to open the doors for scalability so that the supplier side can scale into the billions and the trillions and the ecosystem that has already emerged can continue to grow exponentially without hitting any scalability barriers. 

This also opens up for integrating decentralised finance with the real world through the use of real-world assets as collateral into Multi Collateral Dai. That includes things like real estate and commodities or government bonds, which further means that you can have the Maker protocol and the decentralised finance ecosystem and provide capital into the real world markets – and through that make a real-world impact on the access to finance all over the world. 

But it also just means that Dai as a currency and a DeFi ecosystem becomes a lot more secure because it is backed by diversified assets.

MJR: And not only by cryptocurrencies that are all more or less following each other…

RC: Yes, exactly. If you look at something like the financial crisis, the entire problem was that all the financial products were backed by the same asset, and that was real estate. The key to Multi Collateral Dai and the key to maintaining the stability of Dai even if it scales into potential the trillions is to make sure that it is backed by very, very diversified assets.

MJR: So that could be anything from existing securities to real-world assets like real estate, oil, gold, or even a rainforest. In principle, anything could be tokenized and used as collateral in the system?

RC: Yes, that’s correct.

MJR: But you are not there yet, right?

RC: That is true, but now we have the technical foundation ready. That is again why the launch of Multi Collateral Dai is just the beginning. We have laid the foundation, and now we can build on top of it. Now we can go out and support the ongoing trend of tokenization, and we can begin to onboard real-world assets into the Maker protocol as collateral.

Obviously, there is still a lot of work to be done, because we still need to make sure that all the different tokenized assets are technically compatible with the Maker protocol, and we also need to make sure that we can do very safe risk assessment of these assets, and that they provide stability to Dai. But the Maker community is heavily involved in researching all the different tokenized assets and looking into the models that we are going to use to risk-assess them properly.

So, I expect to see a snowball effect here, and I certainly believe that Multi Collateral Dai is coming at the perfect time where all the pieces are already in place, and we can move forward with onboarding a lot of real-world assets into Maker and see it scale a lot in the short term.

MJR: But at the moment – right now! – we are still only talking about crypto assets as collateral in the system, right?

RC: Yes, when we launched Multi Collateral Dai on the 18th of November it was only with Ethereum and Basic Attention Token (BAT) as collateral, because our initial focus is to safely launch the system and make sure that everything runs correctly, and then we can begin the process of onboarding assets. The immediate next step will be to onboard more crypto assets just because it is straightforward from a technical perspective, and from there as quickly as possible, we will start onboarding real-world assets.

Click to read PART TWO and PART THREE

Photo by SpaceX on Unsplash


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