Presented by Gregory Di Prisco, Head of Business Development at MakerDAO, at Fluidity 2019. Fluidity brings the worlds of finance and technology together to shape the future of blockchain and capital markets. On May 9, 2019, we welcomed companies and teams to help shape the narrative of rebuilding finance at the historic Williamsburgh Savings Bank in Brooklyn, New York. Resources: Website: https://fluiditysummit.com Facebook: https://facebook.com/fluidityio/ Twitter: https://twitter.com/fluidityio LinkedIn: https://linkedin.com/company/fluidityio/ YouTube: https://youtube.com/channel/UC0NBCYlgLIxjSljf7CV91nQ/

2. BEYOND BANKS Gregory Di Prisco, Maker Foundation

3. MakerDAO 2019: Un-Banking Lenders
How legacy financial players can access the Dai Protocol.

4. What is the Dai Protocol?
CDP
Digital Asset
Margin Management Contract
Generate Dai
SF (%)

5. Similarities to the Legacy Financial Industry
Short Term Financing Facilities Dai Protocol (DP)
Repo Desk CDPs
Dollars Advanced on Collateral Dai Creation
Lending Rate Stability Fee

6. Think of us like a decentralized central bank, but better.
MakerDAO is Different
● The Dai Protocol is not subject to the politics of central banks
● Ability to generate Dai allows for structurally lower rates
● The Dai Protocol can lend against any asset, not just cryptocurrencies
● The Dai Protocol can “un-bank” lenders by replacing their current warehouse
facilities

7. Scientific Governance (not Politics) Sets Rates
Stability Fee
(3.5%)
DSR (2.5%) (1.0%)
MKR
Holders
Oracles
Risk
Teams
● MKR holders govern the Dai Protocol through
transparent debate and on-chain voting
● MKR holders vote upon and set rates by
considering the risk profile of the asset, the
diversification of the overall collateral pool,
and the need for additional incentives to hold
Dai (Dai Savings Rate)
● No black box, the Dai Protocol balance sheet is
only a click away.

8. Un-Banking Lenders - Anyone Can Access the Dai Protocol
1. Borrower interacts with partner’s front-end, providing data about the asset they would like to borrow
against
2. Lend Co. accepts or rejects asset based on existing business process and provides Borrower with
fiat currency
Traditional lenders can access the Dai Protocol without changing existing front end infrastructure.

9. Un-Banking Lenders - Behind the Scenes
Lenders must set up special legal and technical infrastructure to access the Dai Protocol.
1. Lend Co. creates an on-chain representation of the asset and places these in a smart contract.
Transfers ownership of the asset to a special purpose vehicle structured to handle the circumstances
of CDP liquidations
2. An ERC20 token is minted to be a claim on the liquidated value of the SPV
3. Price oracles use the on-chain asset data to determine the value of the ERC20s in the DCS

10. Un-Banking Lenders - Default
Lenders put these structures in place to maximize liquidity. This keeps rates low and protects the Dai Protocol.
1. An on-chain auction is held for the ERC20 tokens representing a claim on Dai
2. Lend Co. sells the assets in a more liquid market (e.g. a factoring company or a bank)
3. Keepers bid on the ERC20 tokens using the on-chain data to make a value assessment of the assets
4. Lend Co. takes the proceeds of the off-chain sale and converts them to Dai
5. The Dai is sent to the Keepers holding the ERC20 tokens

11. 2018-2019 Summary
TOTAL DAI GENERATED UNIQUE DAI HOLDERS ETH COLLATERAL
$300M 32k 2M ($340M)
● System had one collateral asset (ether) which dropped 94% in value over the course
of the year
● Not a single under-collateralization event, Dai remained stable (without DSR)
● The next version of the system will have a more diversified collateral pool, more
advanced monetary policy and more complex mechanics to ensure stability at scale
Trial by fire.

12. Anticipated Collateral Types
The Dai Protocol has the potential to facilitate the following assets after an upcoming software upgrade.
Residential Mortgages
Shipping Receivables
General Receivables (Invoices)
Inventory Financing
Commodity Assets
Royalty Receivables

13. Think of us like a decentralized central bank, but better.
MakerDAO is Different
● The Dai Protocol is not subject to the politics of central banks
● Ability to generate Dai allows for structurally lower rates
● The Dai Protocol can lend against any asset, not just cryptocurrencies
● The Dai Protocol can “un-bank” lenders by replacing their current warehouse
facilities

14. www.makerdao.com
@MakerDAO /makerdao chat.makerdao.com