Vitalik suggests Maker give other protocols a chance! He recommends active governance for stablecoin RAI to reduce Lido's dominance.

Ethereum co-founder Vitalik Buterin sold MKR worth tens of thousands of dollars over the weekend, breaking a two-year hiatus. The community speculates that this move was due to dissatisfaction with the direction of MakerDAO's "Endgame." On Saturday night, Vitalik discussed this in the stablecoin protocol Reflexer, stating that if MakerDAO takes a strange direction, it will benefit the development of the stablecoin RAI and further reduce Lido's dominance in LSD.

Full coverage: Vitalik's sale of MKR indicates dissatisfaction? Maker founder praises Solana, causing controversy, and rushes to explain: Ethereum is also a good chain

Introduction to Stablecoin RAI

It took at least 3 years for the MakerDAO project to complete a forked chain based on the Solana codebase. Vitalik stated that this changed his view on a single chain, and he mentioned that the RAI community's more proactive governance approach is somewhat acceptable compared to before.

RAI is a stablecoin introduced by the Reflexer protocol. In Vitalik's previously categorized stablecoin framework, RAI belongs to the third category, which is governance-minimized and backed by cryptocurrency reserves. RAI is minted by ETH collateral, not pegged to the US dollar, and its price fluctuates based on a redemption rate.

Vitalik has mentioned that RAI avoids all connections with the non-crypto financial system, making it harder to attack. However, the redemption rate may be negative, and the price is not stable, leading to certain user experience issues.

RAI's Potential Impact on Lido's Dominance

Returning to the governance topic of RAI, Vitalik mentioned that the protocol can adopt a more proactive governance to support ETH staking and intentionally only accept non-dominant staked ETH, meaning it does not support stETH introduced by Lido.

This statement stems from stETH's over 30% dominance in the LSD ecosystem. If RAI as an emerging stablecoin is poised to rise and with the active governance of the Reflexer community, it will help lead to the use of less popular LSD protocols.

Moreover, Vitalik also stated that MakerDAO currently leads in the category of "DAO governance and backed by RWA" stablecoin type, and in terms of development strategy, it is reasonable for RAI to continue developing towards its original category of "governance-minimized and backed by cryptocurrency reserves."

However, he also believes that MakerDAO's development direction seems unfavorable, providing opportunities for other protocols to develop other businesses.

"If MakerDAO damages itself in strange directions, then for RAI, it makes sense to develop closer to the middle ground of DAO governance and backed by RWA reserves."

Current Usage Data of RAI

Despite the validity of Vitalik's arguments, according to the usage data of RAI here, the current ETH collateral amount is only 14,005 and the circulating supply of RAI is about 3 million. Before growing enough to impact Lido's position in the LSD field, RAI still has a long way to go.