Partnership with Ethereum ZK rollup to bring about improved availability of DAI stablecoin and make minting, trading and liquidation significantly faster.
MakerDAO, the largest lending protocol in the DeFi industry and creator of the DAI stablecoin, has announced that on April 28th 2022, it will deploy on Ethereum zero-knowledge (ZK) rollup StarkNet, marking a significant milestone in its multichain strategy. The integration with the Layer-2 network will greatly reduce the cost of DAI transactions and minting, while significantly enhancing throughput speed compared to the Ethereum mainnet.
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Developed by StarkWare, StarkNet is the first ZK-based Ethereum rollup for MakerDAO and follows its deployment of bridges to optimistic rollups Arbitrum and Optimism. The integration forms part of MakerDAO’s multichain strategy to make DAI and Maker Vaults available on as many rollups and sidechains as possible, growing users and establishing the Maker Protocol as the most powerful and accessible lending protocol around the ecosystem.
Louis, from the StarkNet Core Unit at MakerDAO, said, “As we see unsustainable gas fees drive more activity and users to a wider variety of blockchains, security challenges that come with bridging will continue to grow. Projects must move on to Layer-2 to continue to serve users, and MakerDAO is partnering with StarkNet to do exactly that. With this strategy, we are positioned to cement the Maker’s Protocol’s position as the leading decentralized lending protocol in the industry, and also the status of DAI as the most decentralized, secure stablecoin. Through this development, MakerDAO will increase its product offerings and grow alongside Ethereum.”
One of the primary benefits of the Layer-2 bridges to MakerDAO is the ability of users to make fast withdrawals. Thanks to the Maker Wormhole—MakerDAO’s solution to bridge across the Ethereum ecosystem—and the increased performance enabled by StarkNet, users will be able to move DAI seamlessly between Layer-2 protocols and from Layer-2 to Layer-1. The solution utilizes a ‘burn and mint’ mechanism for almost instantaneous withdrawals, in comparison to settlement times ranging between several hours to weeks via other rollups.
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Additional benefits for holders and users of the DAI stablecoin on StarkNet include reducing minting time, improving the liquidation experience and significantly reducing gas costs. This will enable retail users to once again utilize Maker Vaults to deposit collateral and generate DAI. The improvements will likely also increase the number of MakerDAO users–such as short-term, transaction-cost averse traders that would not exist on Ethereum Layer-1—while streamlining future bridging to other scaling solutions and sidechains.
A dedicated MakerDAO engineering team has been established to implement a multiphase roadmap for the integration, which has already begun with the building of a simple bridge with a wallet interface. Subsequent phases include the release of fast withdrawals in Q2, followed by near instant teleportation of DAI across Layer-2, and finally the implementation of the entirety of MakerDAO on Starkware—heralding multi-collateral DAI (MCD) contracts and an interface to migrate bad debt to the Ethereum Layer-1.
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