MakerDAO, a leading Ethereum-based lending system, is preparing to move to a multi-collateral DAI (MCD or Dai) system. The protocol’s community has closed down the single-collateral Dai (Sai) system, as the decentralized finance (DeFi) solution gets ready for the transition.
MCD had been activated on MakerDAO in November of last year. It was essentially an update to the Dai stablecoin protocol. Sai is backed only by Ether collateral, meanwhile, MCD (multi-collateral Dai) is reportedly backed by ETH, Basic Attention Token (BAT), and stablecoin USDC.
The upgrade aims to offer more collateral options and it also introduced the Dai Savings Rate, which compensates investors with a variable and competitive interest rate that’s paid in the Dai stablecoin.
The MakerDAO community members were already expecting the eventual transition to a multi-collateral system, however, the move to the new system may have taken place faster that previously planned due largely to the historic March 12-13, 2020 Bitcoin (BTC) and larger crypto market crash (attributed to the economic uncertainty and challenges created by COVID-19).
The Coronavirus crisis seems to have made it clear that the Sai system has serious liquidity issues.
In late March 2020, the Maker Foundation, which supports the maintenance of MakerDAO, had launched a Governance Poll in order to ask the community whether the shutdown of the single collateral system should be initiated.
After getting approval from the protocol’s community, it moved into a grace period between April 24 and May 12, 2020. This time period allowed MakerDAO users to move their Collateralized Debt Positions (CDP) to the MCD system.
During this transition period, Sai holders also had the chance to move their tokens to MCD on platforms such as Uniswap.
MakerDAO’s Sai system was officially closed down on May 11, 2020.
All Sai tokens have now been converted to Ether at the market rate. Those who might still have Sai tokens can go to the migration portal to trade their Sai for Ether.
Sai holders that haven’t migrated their CDP may use the portal to make withdrawals.