[Discussion] EuroDAI

This just needs a USD/EUR price feed.

This approach is too capital inefficient. It must be possible to generate eurDAI directly from collateral.

I agree.

Here the price is not the issue, the issue is to separate both IOU. The vat hasn’t been built to handle it. Just think about the sin, the vow and liquidation. The vat is linked to one vow and one cat/dog. So in order to add more currency we need to sort of duplicate the vat inside the vat.

Some function would need to be changed too, ‘move’ for example.

With this proposal you can have the spot that convert price in euro, you don’t need an other oracle for each assets.

The modifications are less if the vat is associated with exactly one IOU token. All you’d need is an index into an array of IOU tokens. You don’t need a within-vault PSM to balance usdDAI against eurDAI. @befitsandpiper @zenithlight @ejbarraza

At least vats shouldn’t need to change much. I guess you would need a duplicated liquidation and auction system for each IOU token.

As a long time Maker follower but rare Forum poster, I feel very strongly about EuroDAI and other DAI-currencies and I have been looking forward to them since SAI days. I felt compelled to post.

I feel everyone is unfairly dismissing the DAI-EuroDAI vault option. Yes, there is capital inefficiencies for anyone wanting to go long on ETH using EuroDAI. But remember, that the ethos of MakerDAO has always been that DAI users are our customers, not Vault owners. We are trying to make the best EuroDAI, not the most seamless Vault experience.

I think having the DAI-EuroDAI vault is by far the simplest option for the public to understand (improved public perception). It doesn’t require any sub MKR variants. It also scales much better for the creation of other DAI-currencies.

I’m also heavily of the opinion that MakerDAO should prioritise control of EuroDAI and other DAI-currencies and see their successful implemtation and uptake as a matter of maintaining positive public perception / positive marketing. There is risk of copycats entering the market and getting first mover advantage here.

My thoughts as well, is that having DAI (a token controlled by MKR) as the sole unit of collateral creates some intersting opportunities.

  1. DAI demand and profit: every DAI that is placed into a Vault is natural demand for DAI and is already providing value to MakerDAO. There is no need to profit seek (double dip) for EuroDAI. Any rate setting can be used purely to control the peg.

  2. Control when EuroDAI peg is high: When the DAI peg is high, rates need to be lowered. Or recently the PSM has been used to hold stablecoins (creating additional risk). However when the EuroDAI peg is high. Anyone can flashloan DAI, open a EuroDAI Vault, purchase EuroDAI on the open market, return the EuroDAI and keep the DAI profit. Therefore EuroDAI Vault fees can be kept close to (or at) 0% and only raised if the EuroDAI peg goes below 1.

  3. Adding a EuroDAI-DAI Vault as an option to create DAI will drive additional demand for both currencies and open up the possibility for decentralised forex trading. This effect will be multiplicative as more DAI-currencies are added.

  4. Vault liquidation: (partial idea). I couldn’t come to a conclusion here, but I feel that liquidations with DAI as collateral should be more straightforward. Is there the opportunity for MakerDAO to instantly settle the debt? Someone with more experience than me maybe able to chime in.

I very much appreciate and respect Brian’s concern about SC team workload. So maybe this can’t be implemented in the short-medium term. But I think the option of copying Maker code, creating sub-MKR coins is a very short sighted and will tarnish the MakerDAO brand.

We are better off waiting to create a more robust system when we have the developer talent available.


Thanks for posting. Your post made me think that we should eventually just depeg DAI from USD (change it to a CPI or something) and then have DAI as the collateral for a usDAI and a eurDAI. Would probably be a great option in the long term to think about.

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Can you draft some code for it, or pseudo code for it as it should not need much effort?

For me, first we can’t change the vat because we would need a migration.
And I actually can’t see how it can work easily.

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I’m not a lawyer but as far as I’ve read there is definitely some concern in the EU regarding stablecoins.
Some of them can be read in the following links:

However, there are some points which really speak for a eurDAI:

  • Technically DAI or hopefully eurDAI aren’t stablecoins in my eyes. The unique form of the protocol is more like feedback control system like a temperature controller. The protocol tries to regulate the DAI to a value by adjusting a few parameters (auctions, stability fee, etc…). So it’s NOT pegged 1:1 to a currency or underlying and it will never be designed to be that way. It’s only here to follow the price as good as it can. We see fuctuations all the time, especially if ETH drops sharply.

  • Maker is an decentralized open-source community. Each and every human beeing is allowed to join this forum, make suggestions, discuss, and give input.

For an example the coindesk link says:

<< One such measure would mandate stablecoins all be asset-backed 1:1 with the euro and other member state currencies and that must be held in European Union-approved institutions.>>

As I’ve explained in the point above, that doesn’t absolutely make sense in case of an euroDAI, and it can’t be required anyway, since the type of the protocol is unique in my point of view.
So in a discussion this point should be made clear in the first few sentences.

If you have a look at the link of the ecb above, you can extract the following conclusion:

<<The process of digitalisation cannot be reversed – on the contrary, it is picking up speed. Global stablecoins are an expression of the need for change.

However, they can pose serious risks, both to our monetary sovereignty and financial stability and to the EU’s market structure, competitiveness and technological independence. We should continue to be open to global competition in order to foster innovation. But we should first ensure that we are prepared to make the most of it, to the benefit, not the detriment, of EU citizens.

The ECB’s response to the ongoing transformation of the payment system is first and foremost a policy response. Our focus is on stimulating the development of safe and efficient EU payments that are fit for global competition.>>

The following sentence should also be discussed further:
<<But we should first ensure that we are prepared to make the most of it, to the benefit, not the detriment, of EU citizens.>>

In my point of view, it’s absolutely clear that EU citizens and mankind can benefit of an eurDAI. As I’ve stated above: Decentralized technology gives us the unique opportunity to put trust into an open-source plattform and codelines, everyone can read for themselves. Let’s have a look at the human rights section of the European Parliament:

<< Article 2 of the Treaty on European Union (TEU): EU values. The EU’s founding values are ‘human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities’;>>

If the Maker approach isn’t exactly a materialization of the lines above, I’ll eat my hat.

However I can only add my point of view as a technician, not as a lawyer, but I’d be extremely glad to be the owner of a eurDAI.


If we use Dai to EuroDai vault/PSM, what is MakerDao using for the swap or exchange rate (oracles?) ? The current system works because we use oracles for the collateral but the Dai is set to $1.00 in the system and needs no oracle. I am just wondering how we intend to set a fair EuroDai price in the system. If we are just talking about a vault and it is over collateralized, I don’t see a problem, but if we are talking about a PSM between two currencies (Dai with natural inflation and EuroDai which is deflationary due to negative rates, I see issues cropping up.)

Yes, the regulation will hopefully become more clear in the future. I do believe at the current time that Dai as designed is not actually a stable coin by this definition. It is also not redeemable directly for the pegged currency (like tether ideally should be or like USDC clearly is) and is not held to as high of scrutiny.

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We can’t change the vat?

Alright then the first step is to recruit a developer to write up a detailed evaluation of the pros and cons of possible approaches. I am not qualified to do that.

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The vat is the main piece of code. Then things are plug around it. Cat, join, flop, flap …

We can change the vat, but as far as I see it we need a migration.

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Most likely there can be many vat (and many vow), one for each currency. We could keep the current vat for usdDAI. It would just push the complexity of the system to an exponential path.

SC will not work on it in the medium-term future so it’s not an option anyway.

I don’t know. But the idea is that it would be shut down without impacting usdDAI. This is a key for the resiliency of the protocol.

Having a eurDAI system unlinked to the DAI Protocol (as described in the first post) has 3 advantages to my view:

  • Keep complexity linear and not exponential
  • Increase decentralization
  • Increase the resiliency of the MKR organization.

A Declaration of Intent was launched by @ultraschuppi and myself to move the idea to the next stage regarding the comments so far.


Potential disadvantages of this method:

  • Any improvements in the usdDAI protocol will not automatically transfer to eurDAI.
  • Governance (already stretched) will likely have to be separate for each xxxDAI protocol version.
  • Much harder to subsequently expand into chfDAI, jpyDAI, cnyDAI etc afterwards as there is simply more things that needs to be copied.

Please tell me if I have misunderstood anything.

  • Any improvements in the usdDAI protocol will not automatically transfer to eurDAI.

Yes. This might also be a blessing as it makes it possible to test stuff only in one currency and see the market response.

  • Governance (already stretched) will likely have to be separate for each xxxDAI protocol version.

The management of xxxDAI Protocols would probably be more delegated. The path is already taken with MIP46: Parameter Proposal Groups.

The last big decision (something there was a real debate) we made was to activate the DSR. It’s not currency dependant (or it would be something to experiment only in one to see the difference). Using a PSM is also not currency dependant. Once you’ve made the decision for usdDAI no reason to not do it for eurDAI.

  • Much harder to subsequently expand into chfDAI, jpyDAI, cnyDAI etc afterwards as there is simply more things that needs to be copied.

Probably easier on the SC side but having a single multi-currency DAI system would probably take longer than deploying 10 independent currencies.

But SC is the smallest part of deploying a currency. Deploying integrations, real partnerships, understanding customer behavior, marketing and having real usage (not just farming stuff) that’s the hard part.


I also have the feeling that this, while definitely a solution (and a relatively simple one, which is good!) it is unlikely to be the best solution.
[Remark: But I don’t know how to improve on it.]

This is because we are not leveraging in any way the existing 3b usdDAI supply.
[Or, at least, I don’t see how, yet.]

Virtually anybody could create this euro-DAI system (or other fiats).
The only difference is that we have a very vague ‘Brand name: MakerDAO’, but really, we should leverage somewhat the usdDAI liquidity and the fact that we can mint both usdDAI and euroDAI.


To me, this is the main technical question. After going back and forth a few times myself, I realized that I’m not sure; I think we could benefit from a technical evaluation of possible paths forward. For a given alternative,

  • What will be duplicated?
  • What can be shared?
  • How much burden is on current developers?
  • For parts that are independent of current teams, what new teams do we need?
  • Can we address other major currencies like JPY, AUD, and CHF at the same time?

I suggest that the next step is to work out more detailed plans so we can decide which plan seems most salubrious.


We duplicate already a lot of stuff when we create a new vault. Join, flip, spot.
… the vat, cat, end, flop and flap are not.

Also duplicate here doesn’t make much sense as it is like a new() object that we create.

If we “duplicate” the vat it just means creating a new object inside the stake. The code is not copy over.

This is my concern. Reflexer Labs recently cloned MCD and the deployment took them millions of dollars in investment, an Ethereum OG leading the development effort, and over a year of work. There’s a reason that MCD hasn’t been often duplicated outside of Ethereum’s mainnet and it’s because we have a huge technical and infrastructural moat that’s being actively managed behind the scenes by several Foundation operational teams.

We are at the foothills of a new bull market that is probably going to last for at least the next 12 months. Competent devs are not fungible and are already in scarce supply, we’re just starting to see bidding wars for top talent among leading protocols. MakerDAO is not going to be immune to these economic realities and is going to have to start participating in them if we want to recruit and retain devs in this space. Solving this is a necessary precursor to expanding out to the management of a second protocol. This euroDai team would necessarily be competing for talent with the team, or it is going to dilute talent from the existing team at a time when we should be expanding to secure our exponentially-increasing collateral balances. In either case, being reckless with development resources in smart contracts can quickly and easily lead to loss of collateral, besmirching the MakerDAO “brand” we’ve all worked so hard to build.


@Metternich and @SebVentures and all - sorry for late response, and apologize in advance, I am new to the forum, but I have spent some time thinking and need to share my concerns here: I think DAI is clearly in scope for MiCA as an e-Money token (not asset-referenced) with perhaps MKR token taken a role as a utility token under same regulation, the Maker/DAI governance setup seems not set up for MiCA but you know, with MiCA’s catch all definition of crypto, if it looks and smells like a stablecoin, it is a stablecoin. Therefore, in my view, in 3 years the reserve assets / surplus buffer need to be at least 2 pct of the circulating assets and likely more than 3 pct as DAI circulates well above the MiCA significance threshold of Euro 1 Bn. Even more worrying, we need the foundation to register as a bank and not allow interest on deposits, unless you can convince regulators that the DSR etc is not interest and finally, reserve assets need to be held as high liquid assets. Or change the peg to CPI as earlier suggested, as we will then be magically outside EU’s concerns, per directive recital 41. Maybe I have misunderstood something, but I think Seb has a point


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