Rune Christensen, the creator of the DeFi protocol MakerDAO, recently published a lengthy blog post outlining steps the platform could take to address climate change concerns. The post, titled “The Case for Clean Money,” argued that the protocol’s collateral should include “sustainable and climate-aligned assets that consider the long-term environmental impacts of financial activity.”
According to Christensen, one way to accomplish this would be to reaffirm MakerDAO’s commitment to decentralized collateral.
This would be accomplished by returning to a reliance on the Ethereum blockchain and its native token, Ether. The essay went on to say,
“The Ethereum blockchain was designed with human coordination and resilience in mind.” As the world grapples with the consequences of climate change, Ethereum will allow financial markets to coordinate mitigation efforts, and it will continue to function even during large-scale disasters.”
Users of the lending platform must deposit crypto-assets in order to collateralize the Dai (DAI) stablecoin’s minting. The protocol, which was built on top of Ethereum, initially supported only Ether as collateral. It did, however, later support other assets such as USD Coin, Wrapped Bitcoin, and Basic Attention Token.
According to Maker’s founder, Ethereum’s environmental efficiency will result from its complete transition to Proof-of-Stake consensus with Eth2. He penned,
“Once the proof-of-stake upgrade is completed, Ethereum will become a highly energy-efficient blockchain.” ETH will become a viable alternative to Bitcoin’s current position as the primary cryptocurrency.”
Furthermore, the executive went on to explain Maker’s future collateral strategy. Prioritizing the accumulation of more ETH as collateral while also accumulating more collateral derived from ETH, such as LP tokens or ETH collateralized assets, is part of this strategy.
Furthermore, holding ETH directly as the protocol’s reserves is seen as a way to “both directly support and directly benefit from its ecosystem.”
DeFi, on the other hand, will focus on leading the transition to using staked ETH in order to prevent its competitors from capturing its share of ETH collateral. However, the blog post expressed concern about the network’s decentralized ethos being jeopardized.
“Because staked ETH requires third-party solutions to be usable in DeFi, Maker must ensure that the adoption of staked ETH in DeFi does not jeopardize the network’s decentralization and security.”
Christensen had announced the dissolution of the Maker Foundation earlier in July, handing over all operations to its decentralized autonomous organization (DAO).While Maker’s founders were the DAO structure’s pioneers, the protocol was formalized into a traditional organization in 2018 to shepherd it through its early days, with the eventual goal of returning to decentralization.
The protocol can be expected to lock in more deals as it returns to its roots in Ethereum and decentralization. Ones that will be similar to the recent Société Générale application for a $20 million loan in DAI.