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MakerDAO Aims to Reduce the Counter-party Risks by Activating G-UNI DAI-USDC Uniswap v3 Pool.

MakerDAO Aims to Reduce the Counter-party Risks by Activating G-UNI DAI-USDC Uniswap v3 Pool.
Image Source: Twitter (@gelatonetwork)

MakerDAO, a decentralized lending platform, partnered with Gelato to launch the G-UNI DAI-USDC pool to get exposure to Uniswap V3.

Today Maker has activated the @gelatonetwork G-UNI DAI-USDC Uniswap V3 pool. This pool will initially start at a test debt ceiling of 10M, but once tested, it should become the largest pool in Uniswap V3.

~Twitter (@hexonaut)

The integration of MakerDAO with Gelato network’s G-UNI Uniswap V3 token as collateral will enable the users to use wrapped Uniswap V3 positions to mint DAI. So, the traders would be able to leverage these liquidity positions, and the developers can use Uniswap V3 liquidity positions as collateral in a DeFi project.

So, the Uniswap V3 liquidity providers can potentially earn up to 100 times their fees earned the LP positions.

For Galeto Network, this integration would mean a significant increase in the G-UNI liquidity pool and help to reduce the slippage for larger USDC/DAI trades. MakerDAO needed a fungible LP token to get exposure to Uniswap V3, and G-UNI was the perfect fit.

Soon after the launch, the G-UNI DAI-USDC pool managed to cross $5.9 Million in Total Value Locked.

Let’s briefly understand Counter-party risk:

Counter-party risk means that in any investment or trading, there is a chance that the other party might not fulfil its part of the deal. These sorts of risks are often associated with transactions involving credit, investment and trading.

Sam Mac Pherson, the protocol engineer at MakerDAO, said that this step is one effort to reduce the individual counter-party risk. Other initiatives to further reduce those risks would soon be onboarding. These initiatives would include Institutional Vaults, Lido stETH vaults, Aave D3M, fixed-rate vaults, RWAs, additional stablecoins and stETH/ETH Curve LP tokens.

Let's understand how this integration can potentially reduce the counter-party risks. Gelato Network creates the automated smart contract execution on Ethereum. This integration as the collateral will shift the parts of current USDC collateral on MakerDAO, allowing the utilization in G-UNI pools. Notably, USDC makes around 54% of MakerDAO’s collateral. If it is frozen, MakerDAO would be bankrupt. Hence, it will reduce the individual counter-party risk of encountering frozen assets on MakerDAO.

Closing thoughts

This integration will considerably contribute to the development of decentralized Finance because of the reason that DAI/USDC would be the most liquid pair across all DEXs. The users can earn up to 100 times the fees earned on Uniswap V3 by leveraging their position, and they need not acquire any additional capital upfront.