The Cosmos’s ecosystem was on the hunt for a new decentralized stablecoin after the collapse of Terra’s UST. Now, the hunt is over as cross-chain protocol Umee is filling the gap with DAI.
Brent Xu, CEO of Umee, highlighted that UST’s collapse made it clear that the Cosmos ecosystem was in need of a robust and safe stablecoin. He said Umee’s broader mission is to create cross-chain stablecoins and add Cosmos assets to MakerDAO.
DAI is an overcollateralized stablecoin with a market capitalization of $6.9 billion. But its smaller than market leader Tether USDT. It should be noted that DAI is built a whole lot differently. To mint $1 of DAI, the user needs to deposit up to $1.75 in Ethereum. Other cryptocurrencies, such as Wrapped Bitcoin (WBTC), Polygon (MATIC), Uniswap (UNI), etc., can also be used as collateral. The collateral asset carries its own minimum collateral ratio which dictates how much of what asset one needs to put up mint DAI.
The DAI Stats, data dashboard, shows that Circle’s USDC is the most popular collateral for minting Maker’s stablecoin. However, it has attracted criticism to DAI’s claim of it being a decentralized stablecoin. This is because USDC is very much centralized. DAI is integrated with more than 20 various crypto networks, like Fantom, Solana, and Polygon.
Umee is said to be more than just a bridge protocol. Xu pointed out that other protocols use bridges to create wrapped assets. But Umee stands out as it allows users to lend and collateralize without creating any additional wrapped assets. Umee is developing a tool for users to lend and borrow non-compatible cryptocurrencies.