DAI may be one of the major risk factors for the products DeFi


Key facts:

The analyst, Adam Cochran explained on Twitter three risk factors of RTI in the ecosystem. In his opinion, the decisions of the team MakerDAO could severely affect the DeFi. A teacher, an analyst and former marketing executive for Dogecoin —specialized in the technology related to Ethereum— ensures that the token DAI represents a great risk to the finance market decentralized (DeFi). Adam Cochran explained, through his Twitter account, three reasons why you think that the criptomoneda anchored or stablecoin DAI is the biggest risk that currently has the ecosystem DeFi. In that sense, he gave the three reasons the following names: a house of cards financial, a hand is not invisible and the basket rotates. The first reason that Cochran explains is related to the dependency of the protocols DeFi, whose systems must be based on tokens that don’t come tumbling down. On why he said that, all the systems that depend on the grouping of liquidity, have in common that they need to trust in all the tokens for the system to work. When Cochran speaks of confidence relates to the following elements: appropriate Transfer. A value set that’s worth. Maintain and represent any underlying asset. Not having re-entry. Provenance reliable. All the above points are met on all platforms. He pointed out that a platform DeFi is formed by several layers, which are named as DeFi money lego. He adds that these layers can stop acting like a lego and begin to behave like a castle of cards. “Each layer is as resistant as the previous one,” he said. Having explained this he added that the success of DeFi is related to the products adopted in the platform. To ensure that, notwithstanding the fact that such connectivity is a great benefit, it is also one of the major risk factors. On this basis, says that as DAI is found in the majority of the products Defined, being the basis of most of the ecosystem; therefore, this token is the system’s most vulnerable point.

An invisible hand that can be influenced

To explain the second reason of risk, Cochran indicates that markets that are managed by the community were considered as guided by an invisible hand. However, DAI is governed by the owners of the token MKR, which are controlled by the computer MarkerDAO, the company Maker, A16z (VC) and other investment groups. In this regard, Cochran expressed through his tweets that, unlike a system truly decentralized, which it is supposed to do what is best for the common good of the system, Maker will always do what is best for Maker and its investors. “Now we can assume that the interests of the computer Maker are aligned with those of the community, but that means relying on the computer MakerDAO, and unfortunately the team continues to give us reasons not to trust in their governance capacity,” he said. The strength of a decentralized system is that you do not trust in a single entity, but a community. Source: TheAndrasBarta/ Pixabay.com he Noted, furthermore, that costs rely on the team of MakerDAO then remember that there are few directions that give impetus to the value of this system. It also believed that the governance of MakerDAO leaves much to be desired, as they tend to take decisions of authoritative way when you make important votes. Concluded that DeFi consists in decentralizing the trust, and due to DAI “you must trust in MakerDAO and A16z”.

Trust that goes beyond the ether

According to Cochran, the third reason is the most problematic with DAI, since he explained that the addition of multicolaterales DAI (DCM) represents a serious problem for the ecosystem DeFi. This is because the voters of DAI are only around 56 people, less than 4% of MKR.

They can decide whether to add or not a new asset submitted by the team of MakerDAO, but the way in which they select the assets is not transparent. DAI has the potential to become a basket of assets more risky, which most users are unaware of until it implodes and takes the market. Adam Cochran. Professor, analyst and former marketing executive for Dogecoin

Cochran leaves in evidence that the decisions taken by the team of MakerDAO and A16z, in terms of assets to add to the list of collateral, may knock down the market DeFi as did the so-called “junk bonds,” in the economic collapse of 2008. On this topic, Breaking News has been reported to governance problems against the struggling team of MakerDAO for a long time. The warnings made by the teacher are sufficiently informed as to think about it.

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