The decentralized finance (defi) project Makerdao has announced its plans to support the zero-knowledge (ZK) rollup solution Starknet in order to make DAI transactions faster and network costs cheaper. Starknet will be integrated into the defi protocol on April 28, 2022, as part of Makerdao’s multichain strategy expansion.
Makerdao’s Multi-Channel Strategy Expansion Grows with Starknet Support
On Wednesday, the development team behind the Makerdao project revealed plans to integrate Ethereum Layer Two (L2) scaling solution Starknet. The Starknet protocol is a product developed by the Starkware startup and it offers an L2 scaling solution with ZK-based calculations that use validity proofs.
Makerdao is the issuer of the stablecoin DAI, and after Starknet is supported the team believes it will make DAI “minting, trading and liquidation significantly faster.” Starknet’s Makerdao integration follows the project’s bridge deployments on Arbitrum and Optimism. A project contributor from Starknet Core Unit at Makerdao detailed that cross-chain bridge technology has swelled because of expensive gas fees.
“As we see unsustainable gas fees drive more activity and users to a wider variety of blockchains, bridging security concerns will continue to grow,” said Starknet Core contributor Unit in a statement sent to Bitcoin.com News. Projects need to move to Layer 2 to continue serving users, and Makerdao is partnering with Starknet to do just that.
The Starknet Core Unit team member added:
With this strategy, we are well positioned to cement Maker’s Protocol’s position as the industry’s leading decentralized lending protocol, as well as DAI’s status as the most decentralized and secure stablecoin. With this development, Makerdao will increase its product offerings and grow alongside Ethereum.
While Makerdao Expands, Decentralized Algorithmic Stablecoin Competitors Rise Above DAI
Makerdao’s DAI stablecoin is currently the fifth-largest stablecoin crypto asset today with an $8.7 billion market capitalization. For quite some time following DAI’s inception, Makerdao’s stablecoin was the largest decentralized stablecoin by market capitalization, but recently Terra’s UST has surpassed DAI’s overall valuation.
Makerdao also has its own native coin maker (MKR), which is now the 73rd largest market capitalization at $1.7 billion. During Wednesday’s announcement, the team further stated that the upcoming enhancements “will likely also increase Makerdao’s user base.”
Retail users will be able to leverage Maker Vaults again as well in order to deposit collateral and generate DAI. Currently, the engineering team has started to implement a multiphase roadmap for the integration by first creating a simple cross-chain bridge tethered to a wallet.
“Later phases include the release of rapid withdrawals in Q2, followed by a near-instantaneous teleportation of DAI to Layer 2,” Makerdao’s announcement concludes. “Finally, the full implementation of Makerdao on Starkware, announcing multi-collateral DAI (MCD) contracts and an interface to migrate bad debts to Ethereum Layer-1.”
