Cardano founder Charles Hoskinson has revealed that development of a stablecoin is ongoing that he believes will outclass MakerDAO.
As originally reported by Decrypt, Hoskinson opened up about the development of a stablecoin during a Youtube ‘Ask Me Anything’ session while also revealing that the team at IOHK was actively developing its own DeFi projects that would be rolled out in the next few months.
Hoskinson spoke at length of his interest in the DeFi space which has led to research being done into a number of big projects, with efforts underway to develop their own offerings in the space.
“Then there’s DeFi, I’ve become very obsessed with DeFi lately, we’ve looked at the entire competitive DeFi space, 100s of pages of reports, lots of interviews, lots of discussions and we also looked at all the most popular DeFi things. Already some of it is starting to leak out despite our efforts to keep it a little boxed in because we’d like some announcements.
Stablecoin being built with Emrugo
One of the key takeaways from Hoskinson’s Youtube session was the news that the IOHK team has been working with blockchain developers Emurgo to iron out the logistics of a stablecoin. The token will be built on Ergo to test out the running of the platform.
“Then we’ll pull it over into Cardano and this is going to be an algorithmic stablecoin. We think it’ll be significantly better than MakerDAO,” Hoskinson said.
This is a scenario that Hoskinson had hinted at doing back in February 2020 as reported by the Daily Chain.
That was as far as the IOHK founder would go in terms of the developments of the DeFi front, which means the crypto space will have to wait for official announcements for details about the projects being worked on by the team.
However Hoskinson did stress a little later in his talk that he would make sure their projects in the DeFi space were given the full backing to build successful products.
“As I mentioned I don’t have a lot of direct reports, marketing does now but I am also directly involved in a lot of the DeFi discussion that we have and trying to make sure that those get to the next level, they’re properly resourced, they have the right teams behind them and that they’re moving quickly,” he added.
MakerDAO is one of the most popular DeFi platforms in the space right now. It allows users to lend and borrow cryptocurrencies on its platform. Users can deposit ETH on the platform in exchange for DAI tokens which serve as the loan. When a user wants their ETH back, they simply repay the loan and associated fees.
If a loan is unpaid, or the value of the ETH falls below a predetermined point in the smart contract, the ETH that is staked is sold off to repay the loan and its fees. The threat of liquidation is a mechanism that is supposed to add stability to the system.
Hoskinson happy for others to blaze the trail
While DeFi is certainly the hype word in the cryptocurrency space in 2020, Hoskinson made it clear that patience and timing may be key in developing a successful and reliable stablecoin and DeFi project.
Other platforms are blazing the trail for DeFi projects and the Cardano founder believes that it might be better to let others face the early setbacks and pitfalls.
Hoskinson said that the first-mover advantage is a disadvantage in the DeFi space. He suggests that the network effects of these early projects will be short lived and are ‘often covered with mistakes and scars and explosions’.
Watching, waiting, learning and developing; Hoskinson believes his Cardano ecosystem will provide a better platform for DeFi projects and said that the space will be a big focus going into next year.
“You actually want to be in the imitator, the second-mover category for DeFi. And I think we’ll have a lot more luck than the first-movers did in the space and there will be a mass exodus because those first mover architecture and designs were just too inflexible and Cardano is much better suited as a platform. So that’s what 2020 is going to be about, there’s going to be a lot of that fighting and a lot of that pushing,” Hoskinson said.