Cosmos will soon have the industry’s fourth largest stablecoin. This is a result of a collaboration between Umee, a cross-chain protocol, and the Maker team.
After Terra’s $40Billion implosion last week, the Cosmos ecosystem has been on the lookout for a new decentralized stabilizecoin.
The team at Umee, a cross-chain protocol, announced today DAI will fill that gap.
“The UST crash made it clear that the Cosmos ecosystem requires a stable, robust and safe stablecoin,” Umee CEO Brent Xu said to Decrypt. Umee’s larger mission is to create cross-chain stablecoins, and add Cosmos assets into MakerDAO.
DAI, unlike Terra’s UST is an overcollateralized stablecoin that has a market capitalization in excess of $6.9 million. Although it is still a magnitude smaller than market leader Tether (USDT), DAI has been built differently.
To mint $1 of DAI, for instance, you will need to deposit $1.75 in Ethereum. You can also use a host of other cryptocurrencies as collateral. These include Wrapped Bitcoin, Unswap(UNI), Polygon and many others.
Each collateral asset has its own minimum collateral ratio, which determines how much you have to mint DAI.
Data dashboard DAI Statistics shows that Circle’s USDC is the most used collateral for minting Maker’s stablecoin. This dominance has also been criticized for DAI’s claim that it is a “decentralized” stablecoin due to how central USDC is.
DAI has been integrated with more than 20 crypto networks including Solana and Fantom. According to Llama, Polygon is also included.
What is Umee?
Although users will technically use Gravity Bridge as a connector between Cosmos-compatible and EVM compatible blockchains for their DAI transfer, Xu asserts Umee is more than a bridge protocol.
“Other protocols use Bridges to create wrapped assets-essentially, a quantity of the blockchain’s native cryptocurrency equivalent to the nonnative asset. Umee said Decrypt that Umee was not like these protocols. We allow users to lend and collateralize without having to create additional assets. This allows them to participate in other ecosystems and get exposure. “.
This means Umee is developing a tool to allow users to lend and borrow cryptocurrencies that are not compatible.
This idea has also attracted the attention of many notable investment groups.
Umee secured $6.3 Million in backing from Coinbase Ventures and Polychain last June.