[RAI] - RAI Collateral Onboarding Application MIP6

RAI x MakerDAO Collateral Application

1. Who is the interested party for this collateral application?

2. Provide a brief high-level overview of the project, with a focus on applying collateral token.

After launching in February, over $100m worth of RAI has been minted with more than $300M worth of ETH deposited in the protocol. RAI has managed to stabilize using its on-chain PID controller and is now undergoing a governance minimization process with the intention to calcify the protocol.

RAI Redemption Price:

3. Provide a brief history of the project.

RAI was created as an alternative to USD-pegged stablecoins and as an experiment in peg-less stability. The project began as a ethresear.ch post by Ameen Soleimani, and was then picked up and built into the system we see today by the newly formed Reflexer Labs Team.

4. Link the whitepaper, documentation portals, and source code for the system(s) that interact with the proposed collateral, and all relevant Ethereum addresses. If the system is complex, schematic(s) are especially appreciated.

5. Link any available audits of the project. Both procedural and smart contract focused audits.

6. Link to any active communities relating to your project.

7. How is the applying collateral type currently used?

RAI is used in a variety of ways:

  • Trust-minimized, stable asset used to hedge against volatility
  • Payment mechanism
  • Collateral for DeFi protocols like Aave v2, CREAM and Rari Capital Fuse
  • Interest rate tranching in BarnBridge
  • Reserve asset (Fei Protocol, Metacartel Ventures treasury)

8. Does one organization bear legal responsibility for the collateral? What jurisdiction does that organization reside in?

The Reflexer Labs team currently bears legal responsibility for the RAI collateral and is a US based company.

9. Where does exchange for the asset occur?

Decentralised exchanges such as Uniswap v2 and v3 as well as Coinbase Pro.

10. (Optional) Has your project obtained any legal opinions or memoranda regarding the regulatory standing of the token or an explanation of the same from the perspective of any jurisdiction? If so, those materials should be provided for community review.


11. (Optional) Describe whether there are any regulatory registrations for the token and provide related documentation (including an explanation of any past or existing interactions with any regulatory authorities, regardless of jurisdiction), if applicable.


12. (Optional) List any possible oracle data sources for the proposed Collateral type.

Chainlink RAI/ETH price feed which can be found here.

13. (Optional) List any parties interested in taking part in liquidations for the proposed Collateral type.

Reflexer team.

Additional Explainers:


I’m sorry I have to say it, I love RAI. :eyes:


I may have had a hand in encouraging this MIP6.

At a technical level, Rai is based on a forked version of the MCD codebase. As a “crypto purist” I’ve enjoyed seeing the project take the reflexive approach to peg management envisioned in the original Maker design. This means that while the price of the output token is not stable, it potentially would work as a partially countervailing force to ETH price swings in the MCD system, while providing a stable asset that is not as exposed to regulatory risk as centralized stablecoins.

Despite being based on the MCD codebase, Reflexer appeals to a different customer, namely those less sensitive to a hard peg, than Maker’s vaults, but the output is itself a crypto-native asset that can be collateralized into Dai.

As far as risks go, I’ll get territorial and say that the risk of reliance on Chainlink oracles within their own liquidation system should be examined. We’d also need to be concerned about getting enough liquidity to make the adoption worthwhile. Reflexer is offering liquidity rewards to it’s own users for providing various liquidity options throughout DeFi protocols, it might be worth requesting that Maker vaults be added to their liquidity mining program to boost Dai generation.

In sum, I think that this can help offload a small part of our USDC in a sustainable way.


This was my initial thought as well

They have been expanding into Olympus, WePiggy, BarnBridge, and even FEI is getting into the act.


Hello MakerDAO friends,

I hope this proposal doesn’t come as a surprise to anyone. RAI’s goal has always been to serve as an alternative collateral to centralized stablecoins, and over the last year MakerDAO has judiciously welcomed USDC collateral in order to maintain DAI’s $1 peg. Of course, we know that RAI won’t replace USDC overnight, but we believe that introducing RAI collateral within MakerDAO is a small step in the right direction—towards a diversity of stablecoin collateral that reduces the risks of depending primarily on any single stablecoin.

It would be our great honor for RAI to serve the MakerDAO community.

𝘜𝘚𝘋 𝘚𝘦𝘢 𝘰𝘧 𝘎𝘢𝘭𝘪𝘭𝘦𝘦 𝘤. 2021

To learn more about RAI, please read my RAI launch post (where I do my best to give as much credit to MakerDAO as possible), as well as my recent tweet thread explainer on what we’ve learned about RAI in the ~6 months it has been live.

Thank you all for your consideration. :moyai:


Ick. Is there any possibility of RAI using or switching to MakerDAO oracles? @ameensol

Assuming that there is enough demand to back DAI with RAI, I don’t foresee any other reason not to allow it. As a friendly sister project, I wonder if we can figure out a special Oracle deal for RAI?


I wanna be an adult about this, but you took a swing at us the same hour this application was posted, @ameensol

If DAI is how DeFI went wrong, why are you even here?

That said, we’re adults and will evaluate the application on its merits. Maybe lay off us while the application is pending?

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took a swing at us

I really can’t speak highly enough about MakerDAO. I recall saying in 2018 that if I wasn’t working on my own company, I would be applying for a job at MakerDAO because it was the only thing that actually made any sense. MakerDAO has unequivocally crushed it across the board over the last few years, been the godfather of DeFi, and DAI is now a household name. I even took out the loans for my house using crypto in Maker vaults.

I fell in love with DAI when DAI was simple to explain. “It’s cypherpunk money - backed by ETH”. DAI helped my company bank when no one else would. At some point in mid-2018 we held 1.5% of all the DAI. Today the story of DAI is a bit more complicated, which is why I worked on RAI, to preserve that initial vision of simplicity, with a few tweaks to enhance stability without needing centralized collateral.

If DAI is how DeFI went wrong, why are you even here?

MakerDAO made the pragmatic choice at the beginning of DeFi summer—in the face of massive DAI demand—to introduce USDC and the PSM and defend the peg. It was probably the best decision for MakerDAO at the time, and the long-term consequences of USDC dominance were not super clear. Now however, with USDC passing USDT (and on track to keep growing), USDC dominance is increasingly concerning to me, as it could mean abdication of Ethereum’s fork-choice to USDC (Bloomberg wrote about this today). I’m here today because I want to try—however futile it might seem—to help reduce the dependence of MakerDAO and Ethereum generally on centralized collateral like USDC, by providing RAI as an alternative.


It’s about time for us to harden the oracles so we’re open to explore.

We’ve been thinking about having two main price sources (in this case can be Maker & Chainlink) and in case the two prices are far away from each other, the oracle would default to a third feed. In this scheme the problem is picking this third feed which is not easy.


So others have already commented on this. But I’d be curious to get some of the RAI folks (@ameensol @stefan) interpretations here.

What is the incentive to use RAI as collateral to mint DAI in both the short-term and the long-term?

My understanding is that if RAI supply is not keeping up with RAI demand (measured via market price), then the price of RAI is reduced via the redemption price controller until this is brought back into balance. So if there is too much RAI demand, people are probably not going to lever up on RAI?

In the opposite case, if RAI supply is higher than RAI demand, I can see why people would want to use a RAI vault (to profit on the redemption price increase.)

My concern is that (like with DAI) there is far more demand for a stable (or volatility minimized) asset than there is for credit on ETH in most or all market environments, and that means that in most market environments I would expect RAI redemption price to be stable or decreasing - and therefore RAI would not be a collateral people want to mint DAI against.

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Something that could help this discussion is some data visualization. This is the quarterly redemption rate data:

It’s helpful to think about the redemption rate over a longer period of time (quarters if not more). We had people freaking out this summer when the rate was going negative but in the end, the rate has been positive over the last 3 months so longs were fine.

On the topic of RAI trending down over time, it’s a possibility. Assuming that happens, there are still cases where the rate fluctuations cancel out over many months.

One thing that could alleviate this concern and hasn’t been proposed yet is a LP token containing RAI (and DAI?) as collateral. This might also partially address the liquidity concern that @brianmcmichael pointed out. I know Monet tweeted about the focus on LP tokens but I haven’t had the chance to follow progress.


Looks like the FEI community is proposing a RAI bonding curve with 6 million FEI subsidized. Pretty cool, IMO.



I have not had time to read the post, but I have a specific question, how can you measure the parameters of liquidation? I understand that RAI is stabilized according to the needs of people can be at 1 as at 5 and be that your price.