Polygon via MATIC fits my criteria as a larger TVL player that will mint significant DAI. Given that they are a significant L2 player and their token is minted on L1 gives reasonable assurance of security. MATIC is listed on a number of key CEX’s so trading and liquidity is robust.
There is some concern that the team is predominantly from India where the government has not show a positive approach to crypto but even if India were to kill crypto use it probably would not hurt Polygon that much. Though it could impair teams from getting payments legally. I don’t see this as a major impediment.
If MATIC is willing to deposit something like 300-400M of MATIC to borrow 100M of DAI at, at least 3% SF (might want to run this one a touch higher at like 4%) and have a decently high LR (at least 150) I would support giving them a DC of $100M. Realize the vast majority of this would probably end up on Polygon network to support borrowing there. I believe this would be good for both Maker and Polygon and simply requires some decent management.
Biggest issue here is going to be having parties ready to buy if this massive vault were to come under the liquidation gun so I really would like to hear from the Polygon team about how they are going to stagger liquidation prices. I personally would like to see them use multiple vaults with different CRs so this simply can’t happen or at least have something in place for automated CR management. I mean the team clearly has the collateral to toss to avoid liquidation I just want to try to make sure this is solidly in place because I don’t think the liquidation system could handle a single chunk of 100M very effectively in a dropping market situation. Particularly if everything is dropping (ETH, wBTC, with MATIC and the rest simultaneously).
Regarding using this DAI to invest in Ethereum Ecosystem. My expectation is that it is a portfolio diversification and investment strategy to basically grow the PolygonDAOnetwork into a family of DAO’s and products and reduce exposure to MATIC price by taking on cash at what is a pretty cheap rate 3%. Polygon could take this DAI and plow 35-45% into COMPOUND and lever it to earn 10-11% to cover the entire 3% SF on the rest. Really a shrew’d play to borrow cheap and loan to pocket the interest rate spread. Bonus is it gives them cash to manage token price so it is my hope that Polygon opens up a pretty sizable MATIC-DAI uniswap v2 type LP to start building price support via liquidity positions.
I would be very supportive of a Uniswap MATIC-DAI v2 LP vault on Maker btw as this would fit perfectly with my DeepLiquidity thesis regarding community value building and it would bring more DAI online faster than LR changes or RWA. Sure 100M isn’t that much but it is a good step and better toward MATIC vault DC in the 200-500M range which at 3% would be 6-15M DAI revenues/yr.