Open Finance Fundamentals: The great migration (of Dai) continues

This report is part of a weekly series where we will explore the mechanics behind major Open Finance protocols and evaluate them on a fundamental basis. You can view prior reports here.

Maker underwent a major milestone last month upgrading to Multi-collateral Dai (MCD). We wrote in detail about the implications of adding real-world collateral, the Dai Savings Rate, and the potential "too big to fail" dynamic in our latest Messari Pro Research report. Since the upgrade, the system has undergone a gradual change of upgrading single-collateral Dai (Sai) to the new Dai.

Source: sai2dai.xyz

While the first few days of migration were slow, recently more Sai has transitioned to Dai. This is in large part to major providers such as Compound supporting MCD, although they are still the largest Sai holder with over $13 million. More loans on Compound are expected to transition away from Sai since the interest rates on both the lending and borrowing sides are more favorable with Dai. The transition from SCD to MCD is arguably one of the most impactful upgrades the nascent DeFi space has experienced and seeing Dai surpass Sai in the near future is a sign of readiness to transition away from Sai altogether.