Age of the DAO: DevCon 5 Boosts DeFi Popularity

Published on Unknown Date by Cryptovest Staff

The mentions of DAO projects, or decentralized organizations, increased during the latest edition of DevCon in Osaka.

The march of decentralized finance and DAO entities on the Ethereum network is growing. Recent observations show a marked increase of mentions during the latest edition of DevCon in Osaka, Japan.

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The first DAO, the one which met with an unfortunate smart contract exploit, did not bring about the wave of popularity. Now, a DAO is mostly an entity dedicated to forms of crypto-based collateralized lending, or decentralized finance. The Maker DAO, as well as smaller organizations like the Moloch DAO, are gaining speed.

Lately, decentralized apps on Ethereum moved away from games, and into the sphere of collateralizing debt, while generating profit for participants. The Maker DAO is so far the largest, and the best-collateralized.

However, this also means the concentration of significant wealth within Ethereum smart contracts. Concerns were raised on what would happen in case of another hack or exploit, and whether the Ethereum community would deem the DAO large enough to save through a hard fork.

“Assuming it was possible technically and without the possibility of introducing new bugs, then I would personally be OK with a fork to get stolen funds back,” commented user c-i-s-c-o.

Currently, 1.42 million ETH are closed in as PETH, to be used as collateral for the creation of DAI. Maker plans to launch multi-collateral DAI from November 18, making its smart contracts even more complex. Maker also plans to launch collaterals in the form of traditional assets or even fiat.

DAO-based decentralized finance is also facing risks from ETH price volatility. When the price action breaks down the collateral requirements, the positions are liquidated. Currently, ETH trades around $183.87. But a recent bout of volatility led to liquidations of some positions based on Maker DAO.

Maker DAO has also been adopted by Coinbase, which would also allow a voting mechanism for those holding MKR in custody. Voting is important to determine the lending rate for issuing DAI, while also solving issues on the general organization.