DeFi Ethereum

Meet Rai: A Governance-Minimized DeFi Project Set On a More Stable Version of ETH

This week, the Reflexer Labs group published a whitepaper for its first reflex bond offering , the RAI.
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Last fall, MakerDAO, the leading DeFi lending project to date, rolled out the Multi-Collateral Dai (MCD) system, which opened up new collateral types to underpin automated Dai stablecoin loans beyond just ether (ETH).

However, MakerDAO’s pivot toward embracing more centralized assets like USDC and WBTC in recent weeks has led to some Ethereum community stakeholders seeking to build a more conservative, streamlined version of MakerDAO that can work in a minimal and mainly ETH-centric fashion.

Here, cue in the MetaCoin project.

The Rise of MetaCoin

Back in February 2020, MolochDAO founder and SpankChain CEO Ameen Soleimani published a proposal for the so-called MetaCoin v0 stablecoin system.

“The goal of such a system isn’t … to usurp DAI’s position as the de facto decentralized stablecoin, but rather to create a safe alternative for those who have different risk preferences,” Soleimani said at the time.

As originally set out, then, the MetaCoin model was an ETH-only collateral system that was underpinned by a META governance token (think MKR or COMP in the MakerDAO and Compound ecosystems, respectively) as well as COIN, a Dai-like analogue.

Two months after MetaCoin’s reveal, blockchain developer Stefan Ionescu of Reflexer Labs took the MetaCoin project’s efforts to the next level with the introduction of “reflex bonds,” a new ETH-centric DeFi collateral type that could underpin MetaCoin’s COINs in very stable fashion. Ionescu explained at the time:

“The purpose of a reflex-bond is to be a more stable representation of its collateral while still maintaining a high level of trustlessness. If used in other protocols, a reflex-bond can shield its users against major and sudden moves in the cryptocurrency markets. For example, if Maker had used reflex-bonds as collateral prior to Black Thursday, [Maker Vault] creators would have had more time to avoid complete liquidation.”

The good news, then, is that reflex bonds are getting ready to hit the prime time in Ethereum’s DeFi ecosystem.

MetaCartel Ventures Is In

Ethereum’s two most high-profile decentralized autonomous organizations to date have been the Moloch DAO and the MetaCartel groups.

Zooming in on MetaCartel, the DAO made waves last December in spinning out a for-profit venture capital arm dubbed MetaCartel Ventures (MCV).

“If paired with relevant investing experience, we will be able to identify high value early opportunities that other investors are oblivious to,” the MCV team said at the time.

Fast forward a few months, and just a matter of days ago MetaCartel Ventures made its first investment into Reflexer Labs, the team that’s building out the reflex bond infrastructure that’s going to serve as the foundation for the MetaCoin project.

Whitepaper Released

This week, the Reflexer Labs group published a whitepaper for its first reflex bond offering , the RAI. Therein, the project’s team explained:

“A reflex bond’s purpose is not to maintain a specific peg, but to dampen the volatility of its collateral. Bonds allow anyone to gain exposure to the cryptocurrency market without the same scale of risk as holding actual crypto assets. We believe RAI, our first reflex bond, will have immediate utility to other teams issuing synthetics on Ethereum … because it gives their systems a lower exposure to volatile assets such as ETH and offers users more time to exit their positions in case of a significant market drop.”

In the years ahead, then, RAI has a real chance to become a force to be reckoned with in the DeFi space, namely as a very reliable collateral type for lending projects like Maker, Compound, and Aave.

In the mean time, what matters is tracking how RAI performs in the wild. Can stablecoin without a direct peg bring real stability to DeFi? Only time will tell, but many are watching.


William M. Peaster is a professional writer and editor who specializes in the Ethereum, Dai, and Bitcoin beats in the cryptoeconomy. He's appeared in Blockonomi, Binance Academy, Bitsonline, and more. He enjoys tracking smart contracts, DAOs, dApps, and the Lightning Network. He's learning Solidity, too! Contact him on Telegram at @wmpeaster

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