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MakerDAO brings DAI Direct Deposit Module (D3M) to Compound

Integration set to enhance and further stabilize DAI’s low borrowing costs and maintain MakerDAO’s position as most efficient liquidity provider in the DeFi space.

MakerDAO, the longest-standing DeFi lending protocol and creator of DAI, the original, decentralized stablecoin, has integrated its DAI Direct Deposit Module (D3M) with Compound, an Ethereum-based permissionless money market protocol. D3M enables the interaction of Maker’s credit-facility engine with third-party lending pools, allowing MakerDAO to enforce a maximum variable borrow rate for the DAI market on these lending protocols. MakerDAO’s Risk team expects to generate an additional 1.8 million DAI in annualized revenue for the Maker protocol through the integration.

With MakerDAO’s community overwhelmingly approving D3M’s onboarding to Compound, it becomes the second protocol, after Aave, to integrate with D3M, positioning DAI as the most liquid and convenient stablecoin to borrow across multiple lending markets. D3M is a unique Maker Vault that generates and deposits freshly minted DAI to Compound’s lending market. Compound users benefit from a fixed, reliable DAI borrowing rate, which previously would be subject to highly fluctuating interest rates due to the volatile nature of DeFi.

Nadia Alvarez, Head of MakerGrowth, commented: “The integration of D3M with lending protocols such as Compound offers a widely available decentralized and transparent method of alleviating interest rates that could spike due to high demand. This integration is in line with MakerDAO’s aim to offer a wholesale line of credit, and high liquidity to borrowers of all sizes, up to the very largest institutions. The module provides MakerDAO with the opportunity to control DAI supply on external lending platforms and furthers our claim that in an uncertain stablecoin market, DAI offers unrivaled liquidity, security, and reliability.”

The Compound D3M module operates by calculating how much DAI supply is required to drop the interest rate down to a pre-agreed target rate determined by Maker Governance, currently set to just 2%. A fully automated Maker Vault ensures a stable borrowing rate is maintained by minting the required amount of DAI against returned cDAI - an interest-bearing token that represents a compliant representation of DAI balances supplied to the Compound protocol. In exchange, MakerDAO will be able to earn interest on Compound’s DAI deposit rate, while the DAI utilization ratio is also improved through Compund’s growing user base.

Geoffrey Hayes, CTO at Compound Labs, said: “D3M is an incredibly useful tool that will help Compound’s users overcome some of the biggest problems when it comes to borrowing. We know that when borrowing demand is high in DeFi, the borrowing rate of stablecoins can spike. D3M mitigates this spike by minting DAI and supplying it to the Compound protocol, decreasing interest rates and ensuring stability in the price. Conversely, when the demand is low within DeFi lending, DAI will be removed from Compound in order to increase the interest rate to competitive levels. The integration is a win-win for both Maker and Compound, and strengthens the overall DeFi lending sphere, making it easier for users to access borrowing.”

About MakerDAO
MakerDAO is the decentralized autonomous organization (DAO) that powers the longest-standing DeFi lending protocol and enables the creation of DAI, the original decentralized stablecoin.
Governance of MakerDAO is completely decentralized, with proposals tabled and voted on by the Maker Community, comprising people from all over the world. Utilizing an embedded governance mechanism, the decentralized and self-sustaining Maker Community holds sole authority to enact changes to the Maker Protocol through on-chain voting, using the native governance token, MKR.

About Maker Vaults
Maker Vaults are an essential component of the MakerDAO DeFi ecosystem that enables owners to deposit collateral and generate DAI, the original decentralized stablecoin. Users can deposit both crypto and real-world assets as collateral for loans. The Maker Protocol offers Institutional Vaults for TradFi and DeFi organizations to access loans with the highest standards of fairness and transparency, and secure predictable rates of returns that can be 100% trusted. The Maker Direct Deposit DAI Module (D3M) is a type of Maker Vault that provides liquidity to third-party lending protocols.

About Compound
Compound is a decentralized, EVM-compatible protocol that enables supplying of crypto assets as collateral in order to borrow the base asset. Accounts can also earn interest by supplying the base asset to the protocol. The protocol is controlled and owned by its community. COMP is the governance token of the Compound protocol and a predetermined amount is distributed to all lenders and borrowers on the Compound protocol every day.


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Mardi 6 Décembre 2022