Initially, it was thought that MakerDAO’s Newchain might cease to exist after the exciting media attention, but the unexpected continued. MakerDAO launched the network protocol Spark protocol through Gnosis Chain’s plan a day ago, and also brought this as the beginning of a multi-chain strategy. It seems that MakerDAO’s Endgame expansion plan has officially kicked off. Does this mean that MakerDAO is about to seek new opportunities in the multi-chain world? #GNO
What is GnosisChain? The official explanation is that it is an independent public chain built on xDAI. In fact, it is equivalent to BSC, Avalanche and other EVM chains that aim to challenge Ethereum. At a critical moment when everyone is hotly discussing whether MakerDAO should stay away from Ethereum, Spark Protocol chooses to cooperate deeply with a little-known competing chain of Ethereum, seemingly worried that Vitalik will maliciously manipulate the MKR price again.
So, what is the motivation behind Spark Protocol’s collaboration with GnosisChain? Why is Ethereum’s Layer2 not suitable for MakerDAO? Why doesn’t MakerDAO adopt a multi-chain strategy similar to AAVE?
Why Gnosis?
Not only that, MakerDAO's choice can also be interpreted as Gnosis's success in taking advantage of the complexity between MakerDAO and Ethereum. According to DefiLlama data, the total locked value of 50 protocols on the entire Gnosis chain is $77 million, while in contrast, Spark Protocol's single protocol on Ethereum has a total locked value of up to $427 million. MakerDAO then chose to cooperate with Gnosis, a choice that seemed a bit condescending and actively catering to the other party. Why did you have to choose Gnosis? In short, Gnosis was positioned as the xDai chain from the beginning, aiming to use the universe's first algorithmic stablecoin DAI on Ethereum, while having compatibility and scalability with Ethereum, which attracted users of Ethereum, especially MakerDAO.
In summary, it is not difficult to see that Gnosis seems to be a chain designed specifically for MakerDAO (or it makes full use of MakerDAO's floor), and now the spare tire has finally officially taken over. Whether this decision is only for extremely fast transaction speed, low fees and cross-chain, I prefer to think that it means that MakerDAO is implementing the Endgame plan and sending a clear signal: it is no longer satisfied with the Ethereum ecosystem. Incorporating Gnosis into its strategic plan seems to convey a message of "not wanting to be constrained by the Ethereum framework." This decision makes Gnosis part of the MakerDAO ecosystem, giving people a feeling of "chicken and dog get the way."
Why is Ethereum layer2 not the optimal solution?
Ethereum's Layer 2 expansion has achieved some limitations, which is mainly subject to the capacity limit agreed by the mainnet Rollup. As a foundation in the field of DeFi, MakerDAO has a certain self-esteem and ambition to pursue better performance, which is understandable. However, it should be pointed out that digital banking services such as lending and feeders that need to be considered are usually low-frequency trading scenarios, and performance is not their core factor. MakerDAO's ambition is to build a chain with hard fork decision-making power, security and controllability. In order to achieve this fundamental goal, it is not wise to rely too much on Layer 2.
In fact, if we look at the Layer 2 development strategy of competitor AAVE, we may be able to find the reason why MakerDAO is not very interested in Layer 2. AAVE has configured the protocol on 9 different chains, however, the majority of its total locked value is still concentrated on the Layer 1 main chain, in stark contrast to Arbitrum's locked value of only $145 million and GMX's locked value of up to $422 million. Although this view that Layer 2 is not suitable for the development of lending protocols may be a little prominent, it is not unreasonable considering the sidechain nature of Layer 2, its relatively weak decentralized nature, and the core position of lending protocols on the Layer 1 chain. Layer 2 may not be able to meet the grand vision of a lending platform.
It is worth mentioning that after MakerDAO announced its in-depth cooperation with Gnosis, they also quietly proposed to deploy on zkSync. At the same time, MakerDAO did not take too many options in the two main Optimistic Rollup camps, Arbitrum and Optimism. This choice may explain MakerDAO's doubts about the security of Optimistic Rollup? If it is Layer 2, especially if only zero-knowledge proof chooses the ZK-Rollup route, this may trigger people's associations. In fact, it is clear that community members have called on MakerDAO to be able to land on the Base chain on the MakerDAO forum, although at present, considering MakerDAO's requirements for security, this may be somewhat difficult.
What is the end point of MakerDAO’s multi-chain strategy?
According to current data, MakerDAO's CDP TVL has reached $4.68 billion, exceeding the configuration on AAVE's 9 chains. If Spark Protocol's $427 million is added, MakerDAO is still the leader in the DeFi field. In AAVE's total TVL, non-Ethereum chains only account for $500 million, which clearly shows the potential for multi-chain expansion. AAVE has set an example for MakerDAO. From the data, MakerDAO's multi-chain strategy is not as simple as configuring protocols on each chain.
Because if MakerDAO is simply pursuing multi-chain development, Layer 1 such as Avalanche and Polygon are also good choices. However, MakerDAO chose an unknown spare tire chain and ignored these well-known Layer 1 and Layer 2, which raised some questions. The reason why MakerDAO chose Gnosis may be that Gnosis is highly consistent with MakerDAO's vision and can achieve multi-chain expansion without giving up sovereign power over the protocol.
Of course, this is good news for the Gnosis chain. After all, it is an embrace of MakerDAO, and Gnosis's layout in real assets has also attracted the attention of MakerDAO. In general, Gnosis is just a pawn on the MakerDAO chessboard. I have carefully studied MakerDAO's Endgame plan, which includes 5 stages. MakerDAO's multi-chain, cross-chain and even the launch of NewChain application chain have proved that MakerDAO is not subject to any single chain. Their future goal is to achieve seamless embedding in various financial application scenarios and ultimately establish a highly autonomous financial service community.
Although MakerDAO was born and developed on Ethereum, it turns out that they are not bound by any framework and despite the rock-solid nature of Ethereum, MakerDAO still maintains the momentum to innovate.
Finally, it should be noted that the official website application entrance of MakerDAO has been changed to Spark Protocol, which indicates that they are guiding users to use Spark. If users want to participate in the CDP network, they now need to visit Oasis Trade, which was renamed Summerfi a month ago. Not only is the name new this time, but the entrance location is also new, and it may be difficult for general users to find it.
