MakerDAO Rebrand & DAI Upgrade

PYUSD $1B Supply | Aave and BlackRock

Marco Manoppo & Karon Pangestu
August 28, 2024

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Good Morning.

Last week, digital asset investment products experienced a surge in inflows, fueled by Powell hinting at potential rate cuts. Bitcoin led the charge, attracting a substantial $543M, but the gains were short-lived, as today's price action wiped out all the rally.

In Today's Email:

What Matters: Maker Rebrand & DAI upgrade 🧬
Case Study: CCTP Noble Mint Bug 👾
Governance & Features: GHO Integration with BUIDL 🤝

You read and share. We listen and improve. Send us feedback at marco@launchy.app.

Narratives: Sony is launching its Ethereum L2 called “Soneium”, will other big tech follow suit?

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WHAT MATTERS

MakerDAO Rebrands to Sky

CoinMarketCap

State of play: MakerDAO is rebranding to “Sky” and will allow DAI to be upgraded to Sky Dollar (USDS) and MKR to be upgraded to SKY. Maker’s SubDAOs also rebranded to “Stars”, with Spark as the first Sky Star.

DAI holders can upgrade to Sky Dollar (USDS) at a 1:1 ratio, accessing native token rewards.
MakerDAO's governance token, MKR, will be convertible to SKY at a 1:24,000 ratio.
USDS will have a freezing function like centralized stablecoins like USDT/USDC according to a deleted tweet of Spark Protocol CEO.
The platform will also support swapping ETH, USDC, and USDT for USDS.
Future updates could allow users to earn token rewards from other projects approved by Sky Protocol's governance.

SKY token rewards will be distributed at a rate of 600M SKY per year across participating USDS holders

USDS users can opt for the regular Savings Rate, which lets them earn interest on their DAI by locking it in a smart contract.
However, both Sky Token Rewards and the Savings Rate are restricted in countries like the U.S. and the UK, as well as for VPN users.
The current DAI and MKR tokens will remain active, allowing users to choose between them and their new versions.

What’s next: The token and product launch happens on September 18, marking the go-live moment for Sky’s foundational elements.

Why it matters: DAI is the largest decentralized U.S. dollar-pegged stablecoin and the third-largest stablecoin overall, following USDT and USDC, with a market cap of $5.3B.

Our take: The rebranding of DAI to USDS, while adding "USD" clarifies its stablecoin nature for newcomers, the freezing function hints at a centralized characteristic, which will scare decentralization maxis.

For builders and investors: The introduction of new tokens alongside their existing ones could lead to changes in token distribution (printing more money for the project) and ecosystem dynamics (diluting).

CASE STUDY

Circle's CCTP Noble Mint Bug

General Message Passing Process

Credits to Asymmetric Research for the original publication.

A vulnerability was discovered in Circle's noble-cctp module by Asymmetric Research, which supports the USDC Cross-Chain Transfer Protocol (CCTP) on Cosmos.

This vulnerability could have allowed an attacker to mint fake USDC tokens on Noble by circumventing the CCTP message sender verification process.
No malicious exploitation took place, and no user funds were lost.
Circle promptly fixed the bug once notified.
The vulnerability highlights the complexity of cross-chain bridge systems and the importance of defence-in-depth features like mint limits.
Ruslan Habalov of Asymmetric Research highlights that “Despite rigorous security practices, vulnerabilities can creep up due to inconsistencies across different ecosystem implementations.”

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INSIGHTS

PYUSD Hits $1B in Supply

CoinMarketCap

PayPal's stablecoin PYUSD surpassed $1B in market cap last week, doubling its supply since June.

PYUSD user activity surged despite the cooling crypto market. Monthly active wallets reached 25,000 in July, up from 9,400 in May.
PYUSD's supply on Solana exploded to $650M in 3 months, surpassing Ethereum.
PYUSD grew 171% on Solana last month, nearing Tether's dominance.
Solana-based protocols like Kamino, Drift, and Marginfi have boosted rewards for PYUSD deposits, offering double-digit annualized yields to attract token holders.
Recently, crypto custody firm Anchorage Digital also joined the trend by introducing rewards for PYUSD deposits for institutional clients.

FEATURES & GOVERNANCE UPDATE

Aave Proposes GHO Integration with BUIDL

BUIDL GSM

Aave is publishing a temperature check proposal to update its GHO Stability Module (GSM) to integrate BlackRock's BUIDL to manage its stablecoin system more efficiently.

The GSM update will convert two tokens at a set ratio.
GSM ensures GHO's 1:1 convertibility with another asset.
The proposal enables 1:1 swaps between USDC and GHO, using leftover USDC to mint BUIDL shares.
This may offer users monthly BUIDL dividends, while swap fees accumulate in GHO.
Aave believes BUIDL integration may lead to more yield sources and partnerships with BlackRock.

Other notable feature updates:

Base launched Basenames.
Viction launches its DA Network mainnet.
Babylon launches its Bitcoin Staking Protocol.
Aave V3 launches on Era Mainnet with zkSync.
Eden Network launched a decentralized auction app.
Sony launched its Optimism-based blockchain “Soneium.”

QUICK BITES

Solana daily tx fees drop to a multi-month low.
Vitalik Buterin discloses Ethereum Foundation salary.
TON hasn’t produced any new blocks in over 4 hours.
Abra settles securities charges with SEC, agrees to pay fine.
Nasdaq seeks SEC approval to list and trade bitcoin index options.
Macron says the arrest of Telegram CEO was not a political decision.
Bitwise Bitcoin ETF to acquire the assets from Osprey Bitcoin Trust.
Celsius bankruptcy distributions exceed $2.5B to 251,000 creditors.

NOTEWORTHY READS & MEME

Boffin’s read on The FOMC and You.
Axel Bitblaze’s read on Memecoins Framework .
Frank Chaparro’s read on Crypto credit goes conservative.

— MilliΞ (@llamaonthebrink)
1:44 AM • Aug 28, 2024

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.