GnosisDAO Token Is Authorized As DAI Collateral By MakerDAO Delegates

GnosisDAO (GNO) tokens have been authorized as a new vault type for MakerDAO’s multi-collateral DAI stablecoin system by token holders and delegates.

According to voting page data, 91% of voters approve of adding the GNO vault. The outcome indicates that GNO is getting closer to being used as security for creating DAI, the stablecoin released by the Maker protocol. The proposal was already approved by the Maker governance in September. The procedure will be completed by an executive vote in late December.

The approved GNO vault will have a debt floor of 100,000 DAI and a debt ceiling of 5 million DAI ($5 million). The maximum and minimum amounts of DAI that can be issued using GNO as collateral are shown by these criteria. The delegates also authorized a 2.5% stability fee and a 350% liquidation ratio as additional criteria. The former determines the minimal collateralization necessary to prevent the vault from being liquidated, while the latter balances the risk of stablecoin mining against the GNO collateral to maintain DAI’s parity to the US dollar.

DAI is a result of MakerDAO and GnosisDAO’s collaboration

Through this arrangement, GnosisDAO will borrow the majority of its stablecoins on Maker. As part of the agreement, GnosisDAO will make sure that highly liquid assets like ether and staked ether are used as collateral for at least 75% of its stablecoin borrowing activities.

Additionally, Maker urged GnosisDAO to “as soon as feasible” use the $5 million debt ceiling. For its part, GnosisDAO intends to print 30 million DAI utilizing GNO as security. The $635 million treasury of GnosisDAO will be used as the GNO collateral. According to the project’s concept, the newly created DAI will be used to aid in the growth of the Gnosis chain.

The arrangement ought to be advantageous for the Maker protocol as well. On the Gnosis chain, DAI serves as both the main stablecoin and the network’s transaction fee token.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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