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DAI is the oldest and most widely used stablecoin that is entirely issued, managed and redeemed on-chain.
DAI is issued by the Maker Protocol and managed by MakerDAO.
While the Maker protocol is decentralized to a large extent, DAI is predominantly (~72%) backed by centralized assets such as USDC, USDP, GUSD and other off-chain assets.
In our assessment, DAI is one of the safest on-chain stablecoins, having stood the test of time and many crises.
DAI, in its current form, is ideal for users (a) who want a permissionless protocol and risk-managed, volatility-minimized reserves, and (b) to whom DAI’s centralization risks don’t mean much.
DAI's rating can be upgraded from B+ to A- by:
introducing any preventive anti-governance attack measure.
The Stability factor is evaluated on the following:
1. Reserves Management - Quality, quantity, storage and segregation of reserve assets
2. Market Feedback - Indicators of market's confidence in a stablecoin derived from price and trade data
3. Mechanism - Stabilization methods that protect the stablecoin
Very Low Risk
Very Low Risk
The Management factor is evaluated on the following:
1. Restrictions - What deterrents exist to prevent key personnel of stablecoin projects from unethical and illegal behavior?
2. Negative Track Record (if applicable) - Have key personnel been involved in scams, frauds or other illegal activities?
This factor aims to assess risks arising from technical implementations – i.e, smart contract code and oracles. It is currently not assessed, but we plan for it to be evaluated in the future.
The Decentralization factor is evaluated on the following:
1. Platform Censorship Risk
2. Custodian Risk
3. Type of Collateral
4. Diversified Voting Power
5. User Censorship Risk
The Governance factor for on-chain stablecoins is evaluated on the following:
1. Voting Systems - Does the governance function have binding votes and automated on-chain execution of proposal outcomes?
2. Anti-Governance Attack Measures - Are there appropriate preventive and reactive measures to counter governance attacks?
This factor seeks to incorporate external feedback mechanisms such as market and social sentiment into our internal ratings. It is currently not assessed, but we plan for it to be evaluated in the future.