On March 16, the protocol engineer at Makerdao and co-founder of the software and design firm Bellwood Studios, Hexonaut, announced a proposal to use real world assets (RWAs) in order to scale the decentralized finance (defi) protocol Makerdao. Hexonaut insists the bull market was good, but “the time is passing” and he believes Makerdao needs “to take the next step and begin integrating with the real world at scale.”

Makerdao Community Proposal Discusses Integrating Real World Assets Into the CDP Equation

A software engineer from the Makerdao team has an idea that he thinks will invigorate the decentralized finance (defi) protocol. Makerdao, or a collateralized loan position (CDP), is the protocol that manages the issuance and management of stablecoin DAI. Across various blockchains, data from defillama.com statistics show there are roughly 31 different CDPs and Makerdao is the largest in terms of total value locked (TVL). Today, Makerdao has $16. 15 billion TVL, which has increased 6. 99% over the last seven days.

Makerdao, according to Curve Finance, is the second-largest protocol for defi. This is based on the current value of defi. Makerdao’s DAI stablecoin, which has a market value of $9.5 billion, is fifth in size. DAI has recently been overtaken by the stablecoin UST issued on Terra’s network, as UST now has a valuation of around $15.4 billion. This past week, Makerdao protocol engineer Hexonaut revealed an idea that proposes to introduce real world assets (RWAs) into Makerdao’s CDP scheme. Hexonaut explained that a “short-term crutch” was when the project leveraged centralized stablecoins like USDC.

It’s time for the Maker protocol to take bold action and seed the next phase of DeFi.

The bull market has been kind and supportive to all of us, but it is now over. It is time to move on and integrate with the real world at a larger scale.

Here’s how we do it pic.twitter.com/W3LELDMwY6

— hexonaut.eth | ing (@hexonaut) March 16, 2022

However, Hexonaut’s proposal stresses that crypto-native yields have dried up liquidity, and he thinks the project should “expand to uncorrelated, quality loans to diversify the portfolio with productive assets again.” The protocol engineer also published a Makerdao governance proposal the same day, with other contributors, in a post called the “Aggressive Growth Strategy.” In the proposal, Hexonaut details that he thinks it’s inevitable that the project will rely on RWAs. Hexonaut proposes a two-step plan which involves a capital raise and taking risk-on exposure “conservatively.”

The developer believes that Makerdao is the right time to leverage RWAs, as many competitor protocols have been focused on bridging RWAs. Hexonaut proposes

We believe the time is right to kick the RWA effort into overdrive. In addition to our efforts to increase and scale the number of borrowers with whom we collaborate, there have been a few off-chain counterparts and protocols that have emerged in the past year to spearhead the effort to link RWAs to crypto.

Some Makerdao supporters loved Hexonaut’s proposal, while others called it a ‘terrible idea ‘

The comments that followed Hexonaut’s proposal showed that not everyone thought that adding RWAs was a good idea. One user named Psychonaut said that he loved the idea of “raising the surplus buffer by selling bond-style investments.”

” I brought this up in Discord two days back. Psychonaut said that he liked your model more than the traditional bond structure. However, Hexonaut’s suggestion was criticized on Twitter.

“This is a terrible idea,” a Twitter user named Foobar said. Complexity is a problem, not a feature. DAI must be able to stand alone, and without any real-world risks being introduced. If you like RWA, great. Go build a RWA protocol.” Another Twitter user sarcastically tweeted: “Holy sh. Maker with real-world central assets that can immediately be frozen by the [the] government and taken forever .”

What do you think about Hexonaut’s Makerdao proposal and the idea to use real-world assets (RWAs)? Please comment below to let us know your thoughts on this topic.

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