One of the biggest cryptocurrency stories in the second half of 2019 was the MakerDAO project’s high-profile upgrade of the Dai stablecoin in November.
That upgrade saw the stablecoin evolve in numerous ways, namely through a rebrand and with the introduction of new smart contracts that enabled a Dai Savings Rate (DSR) and the Multi-Collateral Dai (MCD) system.
With the DSR, Dai holders can hold a desired amount of the stablecoin in a special smart contract in order to earn interest on those funds. And through the MCD, users of Maker Vaults — formerly known as CDPs, or collateralized debt positions — can use collateral beyond just ether (ETH) to draw out automated Dai loans via the dApp. Basic Attention Token (BAT) is the only other possible collateral for now, pending future Maker governance votes.
The system that MCD replaced, Single-Collateral Dai (SCD), wasn’t to be immediately phased out however, so the old Dai became “Sai,” while the upgraded, MCD version became the new Dai. Accordingly, the MakerDAO team launched a migration portal where users could swap their Sai to Dai, and a transition period has ensued ever since.
With the two tokens now flowing through the cryptoeconomy simultaneously, the grand question on many DeFi stakeholders’ minds has centered on when the upstart Dai would overtake the on-the-outs Sai, which Maker hopes to phase out in the months ahead. We now have our answer.
Dai “Flips” the Sai Supply
On December 9th, three weeks’ time after the MCD system activated upon MKR token holders’ final approval, the number of outstanding Dai overtook the number of outstanding Sai for the first time.
The milestone marked the latest watershed moment for the decentralized stablecoin project and set a wave of congratulatory applaudings throughout the DeFi ecosystem.
Perhaps the first person, if not the first, to hail the overtaking was MakerDAO’s Head of Smart Contracts Mariano Conti, who noted early on Monday that the Dai supply had, at the time, momentarily surpassed the Sai supply.
For a small moment tonight, Dai flipped Sai 😃 pic.twitter.com/uhpPoYGNRY
— 👹Mariano Conti | conti.eth (@nanexcool) December 9, 2019
Since then, the extent of the Dai “flipping” has increased. At the time of this article’s writing, there were more than 58,264,000 million oustanding Dai — some 2.4 million more than the 55,864,000 Sai presently available — according to Dai Stats, a tracker site built by Conti to help stakeholders visualize key Dai, Sai, and MKR data.
And that gap should only increase as Sai’s intended phase out continues to progress. Out with the old and in with the new, as it were.
Focus Turns to Maker as Potential Exploit Flagged
By a long shot, MakerDAO’s automated Vault system is currently the most popular dApp in Ethereum DeFi, with more than 2.2 million ether now locked as collateral in its smart contracts in order to back decentralized loans.
Yet if an attacker or attackers amassed enough MKR tokens and put them to malicious use, they might be able to drain the large trove of crypto collateral currently collected in Maker smart contracts. So argues software developer Micah Zoltu, who outlined in a December 9th post how this particular exploit could occur.
In summarizing his case, Zoltu notably wrote:
“Anyone with ~40,000 MKR (about 20,000,000 USD) can steal all of the collateral in Maker DAO, both DAI and SAI, along with a good chunk of assets from Compound, Uniswap, and other Maker integrated systems (over 340,000,000 USD).”
How? Zoltu says it comes down to Maker’s current lack of a “governance delay,” which means an attacker with enough MKR could, as things stand, deploy “an executive contract … to transfer all collateral from Maker” and then instantly vote on the contract.
Zooming out, there are tradeoffs in play, and a proposal has already been introduced to extend the governance delay to 24 hours, which would make the aforementioned attack considerably less feasible.
Reason the governance delay wasn't in the Maker system previously.
It's all about tradeoffs. https://t.co/xAy8Y0ZIVq
— eric.eth (@econoar) December 9, 2019