MakerDAO Cross Chain Interoperability

I have been looking at ways for MakerDao to expand across other chains as a means of accomplishing 3 core goals:

  1. Reduce fees associated with interacting with MCD smart contracts.
  2. Allow additional collateral types that do not exist on Ethereum.
  3. Foster growth and bring additional liquidity (and users) into the system.

The first project that caught my eye was Cosmos via Tendermint core and the Cosmos SDK (software development kit). It allows for limited interoperability through the Inter Blockchain Communication (IBC) protocol. It will also allow connection to live blockchains through peg zones. This is actually also the same thing that Binance smart chain was built on (they forked Cosmos as far as I understand to build the Binance smart chain). So suffice it to say that one option is COSMOS or BINANCE for interoperability.

The second option that caught my eye was Polkadot The Polkadot project is supported by a good technical team led by Dr. Gavin Wood, co-founder of Ethereum. Polkadot allows the transfer of data and value between different blockchains of its ecosystem. It is a very development-oriented project and many teams have elected to build on Substrate, Polkadot’s technology for creating Blockchains. This is similar to what Cosmos and Binance could offer but at least it would further enhance the interoperability by also allowing data to be transferred cross chain.

The third and in my opinion most functional option is Fusion. Fusion is an upgraded fork of Ethereum so transferring code would be relatively simple. Fusion allows for full interoperability between chains (this includes Cosmos, Binance, and Polkadot in addition to the chains it can connect to directly) through what Fusion calls DCRM (distributed control rights management). This can be simplified best as a group of nodes that in a fully secure and decentralized manner creates accounts on any target blockchain directly as a group. It then shards the private key of that account and splits it among the DCRM nodes and then passes authority to use that key to your Fusion account allowing you to control all of the other blockchains from one account on Fusion in a fully decentralized manner. This is full interoperability and it includes decentralized custody.

Any or all of these options I think would be highly beneficial for MakerDao to expand into. I feel like Fusion is the simplest and most efficient because it is already Ethereum but with gas fees that are more along the lines of one hundredth of a cent per transaction rather than Ethereum’s at least 25 cents each send. Expanding into these cross chain platforms would allow for all 3 of the goals I mentioned above to be met and would also help future proof MakerDao and keep competing lending platforms from gaining any significant advantage over MakerDao by allowing cross chain functionality first. What does everyone think?

2 Likes

I like your thinking–but Fusion? Why not NEAR? (They’re actually adopting DAI from what I was told)–and what about Solana? But Fusion… not sure man.

1 Like

You are adding extra work to already very busy dev teams. Even if we wanted, we can’t.
And i don’t think we should either - i think ethereum will scale in the near/midterm future.

4 Likes

But with regards to Polkadot–I think getting DAI as a collateral in acala.network might be a thing–maybe their Team would be interested and make it work like NEAR

I actually have not looked into NEAR too much nor Solana yet (I will go take a look at both tonight/tomorrow if it takes me all night) and get back to you. Do you actually understand Fusion or are you just trying to say you blindly think Solana and NEAR are better?

1 Like

I have done light reading on Fusion–so, yes you might have a hidden Gem–however, I look at Teams–and as much as ETH heads do not like Solana–they’re making moves. Same goes for NEAR. Not sure what Fusion is doing?

1 Like

I strongly disagree. I know that the dev teams are already stretched thin, but there is no reason why we can’t be working on cross chain interoperability even now. If we need more developers lets hire more. This is important and will lead to a lot of benefits for the system.

Jern are you referring to ETH 2.0 or, L2s like ORs, and ZK Rollups?

From what I heard an OR takes like 1-2 weeks to liquidate back to L1. That’s worse than Bank of America haha

Pull up https://anyswap.exchange/dashboard (not .com that is a fishing site I think) and use metamask on a band new account so that you do not accidently mess up your ETH since they are the same chain practically. This is essentially a cross chain uniswap. At anyswap which is on Fusion’s blockchain you can see how easy it is to port over ETH, USDT, BNB, or BTC and use them on Fusion. If you need any Fusion just message me your account and I can send you one for gas otherwise it is a huge pain to get gas at the start. Mess around with a few dollars worth of these and you can start to get the feel for how easy cross chain can be.

There are directions in the bridge section of Anyswap to say how to set your Metamask so you can link it to Fusion blockchain.

Very cool. Their FSN Tokens are similar to Solana/Serum’s SPL Tokens (“An ERC20-like Token”)

Actually better than “Tomochain” – who is still running a Swap with Erc-20’s

Ethereum 2 will not scale for years. Even years from now it will still make sense and be more efficient for MakerDao to have contracts on other Blockchains or at least on the largest bridges. Fusion can connect to any chain and it does so with 100% interoperability. Cosmos, Binance, and Polkadot are also good but they are all very limited in what they can do in terms of the Interop. Still limited is better than the zero that we are doing right now. Any resources MakerDao puts into this will likely pay off well, so it is something to seriously consider. Fees going from twenty dollars per contract call to two cents is a big deal by itself.

FSN tokens are ETH just that the FSN chain has upgrades over Ethereum with time-lock and some other cool features. When I looked at the Fusion white paper it blew my mind and I invested in the Cosmos ICO so I take interoperability pretty seriously (and have followed the space with excitement for the last 3 years).

Reading about NEAR and Solana now. Even sidechains like Matic would be useful, but full cross chain is the best solution IMO. Will get back to you on this within 24 hours.

For sure. I still think you should look at https://acala.network/ – if there’s one Team that can get Polkadot started it’s this Acala protocol. Seems legit. But what do you I know :grin:

Support L2 (xDAI, Optimism, Loopring…)

There is a big chance that nobody would use them.

So, those few thousand DAI users is all that we’ll get from ETH?

I don’t think we have resources to build and maintain a working version of DAI on L1 ETH let alone expand to other networks. Let’s assume that everything will run on ethereum and that other networks will die or be insignificant. The network effect is very strong in crypto. If we are wrong, we could start working on supporting the mentioned chains in a year or two when there is some evidence of their success.

I’d like for MakerDAO (Foundation) to increase its resources - I suggest selling another 50.000 MKR and put that money to good use. Hm, what if people behind some of those chains buy the stake?

2 Likes

Problem is. You’re an LP on Uniswap in an Optomistic Rollup, that Uniswap LP token won’t have exposure to a Uniswap on an ZK rollup, or Uniswap’s L1. Hopefully that makes sense.

Hence, in the future–you and I will have to navigate to ALL L2’s and L1 to get the best liquidity. Very hard to gain product-market fit with such product, IMO.

I feel like Bitcoin at the very least would get a lot of use cross chain and would not depend on WBTC for it.

As far as waiting for everything except Ethereum to Die off being a strategy, I think that these bridges are likely to stick around so anything that doesn’t die off (and there will be at least a few major chains that don’t) would be connected rather than isolated. Bitcoin is the biggest example. With the network it has alone it makes it worth it for cross chain (but there are others too).

Good points but I’d rather focus on ethereum first, follow the clients. To make a real state analogy you don’t develop a shopping mall in the middle of nowhere just because it’s a promising location. I don’t discount any of the options but it’s honestly not first in my priority checklist, perhaps after RWA yield generating assets are implemented & treasury management is fine tuned we could use some of the funds to explore possibilities (presuming dai would be the kick off for defi development elsewhere, another option is to ask them the funding, that would be a win win)
.

2 Likes

Can the BTC-ETH interoperability be achieved using only BTC and ETH nodes and their scripting/programming languages? If not, can it be done with BTC lightning & ETH L2? It seems that all activity will be on L2s and L1 will just secure critical parts.

In the beginning there will be fragmentation and a war for users but later a few surviving projects should have almost seamingless interoperability/shared liquidity.

2 Likes