🔵 [Analysis] An Elegant Relationship (DAI, ETH, MKR) - Cyrus Younessi

Cyrus Younessi riffs on the relationship between Ethereum ($ETH), DAI, and Maker ($MKR) tokens. "If DAI is money, then what is ETH? How does MKR fit in? How can we make sense of this tri-token system?” Cyrus thinks that ETH’s primary value will be as a competitive future “commodity money.” DAI can be used today as a reliable and unseizable unit of account forDeFi applications, an asset bootstrapped via fully collateralized contracts in MakerDAO. In that light, MKR is not only a “governance token,” but a sort of credit default swap used to insure against the default of the system’s collateral providers. "In the event of a sudden drop in the collateral value, the MKR token is minted and sold in order to raise funds to cover the shortfall. The set of MKR holders can be viewed as governors, but also as insurers. In exchange for providing ‘catastrophe’ insurance, they charge a premium (in the form of a ‘stability fee’). These governors want to optimize the risk parameters such that they maximize their revenues while maintaining the integrity and stability of DAI.”