DAI on RSK. Welcome rDAI

TL; DR

Due to the increase in Ethereum network fees, crypto fans have found several ways of keeping the Defi frenzy alive by transitioning to other networks, some of which are brand new Layer 2 solutions, which are currently competing with Ethereum 2.0 in the race for scalability. Here I propose a novel approach for the enormous DAI community to be able to keep using their DAI: rDAI, which is equivalent to DAI token, but on RSK network. This allows for transacting with DAI in a much more cost-effective way: almost 100 times cheaper.

The problem of Ethereum fees

In 2020, Defi took the crypto world by storm. Hundreds of innovative, disruptive, amazing projects were born, giving birth to and enabling lots of new ways of experimenting finances, in a decentralized fashion. While some people may have suffered losses (some even large ones), definitely thousands of new users saw their wallets grow. This drove many more users to get involved and start using projects that had been created only days ago and promised gigantic gains. All of this had one indubitable consequence: the number of transactions in the network almost tripled between January 2020 and January 2021.

Along with the transaction growth came a rise in gas price, which multiplied by 6 in average in said period of time. By the time of writing this, a standard transaction requires a gas price of 125 Gwei. The same that 12 months ago would have cost 10 times less.

Source: https://ethgasstation.info/

This certainly is an issue for people that intend to use Ethereum blockchain for using a stablecoin such as DAI. Even more for decentralized non-financial applications, which need to interact with smart contracts and thus imply paying these high gas prices, someway competing with thousands of transactions for a place in the next block.

For instance, at this moment, sending 5 DAI to my next door neighbour to split the pizza we had for dinner (let’s assume I have got the pleasure of having such a fancy neighbour) would cost me approximately 16 USD (12 if he’s not in a hurry). No need to explain I would probably look for a different way of paying him (I have to, even though he doesn’t like tropical pizza).

A candidate appears: RSK

Now is when RSK appears on stage. RSK is a smart contract blockchain, and it is secured by the Bitcoin Network. According to their own words, their goal is to

“…construct a fully decentralized internet to enable Decentralized Sharing Economies in order to empower and protect the value of individuals through identity, payments, storage, communications, gateways services and the marketplace.” https://www.rsk.co/index

While it can be considered a Bitcoin sidechain, it is EVM (Ethereum Virtual Machine) compatible, so it has most of Ethereum goodies, i.e. it supports smart contracts. Actually, the similarities between RSK and Ethereum are so great that the exact same smart contracts can be used for both networks.

One important RSK trait is that, at current values, its transactions are way less expensive than Ethereum’s. As of writing this, a typical RSK transaction costs less than 15 cents. On average, some 80 times cheaper fees than what I would have paid to transfer some DAI to my neighbor.

About how sustainable such low fees are, we can note that current average RSK blocks have a 15% utilization (still 85% of room for more transactions), and that if needed, the block mining rate can be easily doubled. And there are several further scaling solutions being proposed, developed and tested.

So, we have stated that any smart contract that can work in Ethereum can also be deployed to RSK (any ERC20 token, for instance), and that RSK transaction fees are around 80 times cheaper than Ethereum’s. So, we can easily notice that this unique blockchain is an ideal candidate for hosting the whole (or at least some part) of the Defi world that has been built on Ethereum.

Due to these benefits, RSK has started to attract a good deal of interest in the crypto community, and some really promising Defi projects have started to appear. A good sign of this blockchain’s health is that more than 70% of Bitcoin miners also mine RSK blocks.

So… Is it possible to have Ethereum tokens on RSK?

The answer is yes. RSK has developed an Ethereum/RSK bridge that allows to move ERC20 tokens between one chain and the other. More on this here. It is as simple as connecting your wallet to the dapp, setting it up for the Ethereum network, and choosing which and how many tokens (let’s say, DAI) to swap. After a certain period which currently is around 24 hours, you will receive the same amount (minus a small fee) of the equivalent RSK tokens in your RSK wallet. In our example, rDAI.

The easiest way to do this, in my personal opinion, is to connect to the Token Bridge dapp via Wallet Connect with Defiant wallet, which supports both blockchains. After scanning the QR code shown in the website, you are immediately connected. Then just set the swap up in the dapp, and sign the incoming transaction on your phone in order to complete the operation. After said time, you will see your RSK tokens in your wallet. The first time you use the bridge for a certain pair you will have to make an approval, one extra transaction.

So far so good. But if we take into account the cost of the transaction we just had to do, we shall think it twice. At current prices, such a transaction (which takes place in Ethereum) costs approximately 60 USD. However, let’s bear in mind that hereafter, we can move tokens in RSK side (rDAI for us) for 1/80th of the fees. So paying my neighbor with rDAI would be much much cheaper. Taking profit of this feature, we can plan such a scheme for moving around 1000 USD:

  1. Transform DAI to rDAI using the Token Bridge: 60 USD (transaction cost) + 2 USD (Bridge fee)
  2. Make certain number N of transactions with such tokens: N x 0.15 USD
  3. Transform rDAI to DAI using the Token Bridge: 0.50 USD + 2 USD (Bridge fee)

Doing the calculations (assuming the 15 USD cost of sending tokens in Ethereum) we find out that if you plan to do more than 4 transactions, you’re better converting your tokens to their r-equivalent, transacting in RSK, and then turning them back to Ethereum. In each transaction from the 5th on you will be saving around 15 USD.

The Token Bridge cost is too much for me

That is a valid point. But fear not: there is another possibility. Using Defiant, you can perform a similar swap, without the need for the Token Bridge. This is a feature offered thanks to a partnership with Kripton Market. Similarly to the option of buying and selling crypto with/for fiat via Kripton Market, Defiant lets you swap many pairs of tokens from your own mobile wallet. And yes, one of these pairs is DAI <> rDAI, which we discussed above. The service fee currently is approximately 1%. You have to also take into account the cost of sending the tokens.

So let’s assume you want to swap 1000 DAI for rDAI, use them for several operations and get your DAI back. Costs are as follows:

  1. Swap DAI for rDAI in Defiant via KM: 10 USD (service fees) + 15 USD (DAI transfer)
  2. Make certain number of transactions: N x 0.15 USD
  3. Swap rDAI for DAI back: 10 USD (service fees) + 15 USD (DAI transfer)

In this case, we have a fixed cost of 50 USD, instead of the 64.50 USD of the Token Bridge.

Also, doing the math we can see that from the 4th transaction on it is already more cost effective to take your tokens to RSK via Defiant integrated coin swap and use the r-tokens as much as you want. Then, if and when you wish, get your DAI back.

But not only is this option more cost-effective. Other advantages of swapping your tokens using Defiant feature are:

  • No need to wait for 24 hours in each of the uses of the bridge,
  • No need to connect to 2 different networks,
  • Uses the very wallet where you have your funds.

Defiant/KM coin swaps

In the example above, we took DAI <> rDAI pair as a reference. But Defiant allows you to change among many pairs of tokens. DAI, USDT and DOC and their counterparts (rDAI, rUSDT and eDOC) can be changed for roughly any of the other ones. Also, BTC <> RBTC swap is available. And there are many other pairs to come.

There is a light KYC process required in order to use this feature, which gets processed in a matter of minutes. Once you get your user approved, you can also reap the benefits of the very handy cash-in and cash-out services, in which you can buy and sell many crypto options in exchange for fiat money. These services are available to users in Argentina, Uruguay, Venezuela. More countries coming soon.

About Defiant

Defiant is the first multi-blockchain self-custodial wallet with an integrated P2P marketplace. With Defiant you can manage hundreds of different coins on Ethereum, RSK and Bitcoin. Swap among them, or sell and sell them for cash. Also, you can very handily use Wallet Connect to interact with any dapp. Defiant is available in many languages, for iOS and Android, and is in active development, so stay tuned for updates.

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This is cool and all for people like me who can navigate the crypto oceans, are the folks from Argentina, Venezuela having an easy user-experience? I would think it might be a bit unclear/confusing for most people.

Also, I have never heard of the Defiant wallet–can you please post more details of such? Otherwise thank you for providing the nice details of rDAI.

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Thanks for your kind words!

There’s a lot to be said about Defiant. But nothing better than trying it yourself: here you can read more, and find links to download it on Android or iOS.

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Also community you can join me and the RSK team on Thursday to talk a bit about DAI on their Network and why it is important to have DAI everywhere :sunglasses:

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I use defiant and I’m a native RSK user. defiant is a nice wallet to use, it offers swaps between tokens and theres a p2p market for swapping fiat to crypto mainly in South America specifically Argentina at the moment. They are planning fiat on/off ramps. Once in the RSK eco system the gas fees are a few cent, they plan to maintain this scaling to 1 billion user capacity. Cant recommend RSK enough. Its mined by a majority of the bitcoin miners so its the most secure smart contact platform on the planet. Theres some very interesting defi in RSK already and some very exciting lending solutions coming soon.

What are some dApps on RSK that might utilize rDai?

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Its an interesting question. I’ve not researched the existing and coming use cases of $Dai on RSK. So mb i can and post them here 1 at a time…

Theres a decentralised exchange (dex) that supports $rDai this is accessible in Defiant wallet

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There is an active p2p marketplace for $Dai & Argentina Peso, so its being actively used and traded. Below examples of a selection of listings (in defiant wallet)

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Interesting. Thanks for sharing :+1:

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Sovryn, https://www.sovryn.app/ is the best DeFi app/community on the RSK network. I’m biased as I’m a member. It’s basically DeFi on (almost) native Bitcoin as BTC is pegged 1 to 1 onto the RSK (aka rootstock) sidechain. DAI would be a great addition.

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Do you have contacts there we can talk to?

Best,

The Growth Core unit :slight_smile:

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Hi! Is it possible to convert rUBI to rDAI on rsk?

Thanks in advance.

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Ask liquality & rskswap in their telegram groups also defiant

You can try dm @edanyago on twitter hes the main guy at sovryn

https://mobile.twitter.com/EdanYago

If you could get on sovryn it would be the best possible exposure on RSK at the moment

Also i asked Tropykus and they said they may add dai in phase two after their launch this month so worth getting in touch, their telegram would be good to make contact

https://mobile.twitter.com/tropykus

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Hi, yeah we’ve already contact them in order to get DAI over those protocols in the RSK blockchain, we hope to see more DAI volume and supply over there soon !

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https://kriptonmarket.com/ Supports dai and looks interesting, ive not had a propper look as its not in my native language, but has a marketplace and swaps i think.
Check it out! Ill be exploring it this weekend with the help of a website translater!

The easiest and fastest way to buy and sell BTC, ETH, DAI and much more in Latin America, from your bank to your favorite wallet!

Big news!

Sovryn (built on rsk) has bridged with Binance chain to accept Dai

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