"DAI Will Die in My Hands": Victim Appears, MakerDAO Founder Interviewed About Terra Collapse Event

Previously, Rune Christensen, the founder of MakerDAO, which was once at the peak of its popularity, was interviewed amid the community’s attack on Terra. He discussed Terra's collapse, the differences between DAI and UST, decoupling from USDT, and his views on the meme "DAI will die in my hands."

He mentioned that although he had anticipated Terra's collapse, he was still shocked when it actually happened. He emphasized, "I'm not in the mood to say 'I told you so.' The collapse is a tragedy for everyone."

What are the Differences Between DAI and UST?

First, Rune Christensen quickly introduces the mechanism of DAI:

There are significant differences between the two. DAI is a collateralized stablecoin, while the mechanism of UST may collapse to zero. Because collateralized stablecoins are backed by real assets, DAI has been designed this way from the beginning. If you want to create a "stable" coin, you need to consider the worst-case scenarios such as bear markets, collapses, massive liquidations, etc. You need to have valuable assets to maintain user confidence and provide a mechanism for users to easily redeem.

He emphasizes that DAI is an overcollateralized stablecoin that can be generated by collateralizing with USDC or Ether.

DAI Could Die in My Hands

The host asks Rune Christensen about the conflicts between DAI and UST, as well as his views on meme images.

Christensen explains that algorithmic stablecoins were well known as early as 2015 during the early development of DAI. The essence of UST's model is also similar to the algorithmic stablecoin projects at that time. However, he believes that based on common sense, one can see that it won't work.

During the past two years of the bull market, there have been numerous algorithmic stablecoin projects resembling Ponzi schemes. Terra's emergence appeared to be a large-scale version of these Ponzi schemes. Subsequently, DAI became the target of attacks within the Terra community, criticizing DAI for being generated by the centralized USDC.

Finally, I couldn't bear these attacks and tweets anymore. I started warning everyone that the UST model is fundamentally flawed and will eventually collapse to zero. All these can be judged with common sense. My well-intentioned reminders seemed to trigger Do Kwon, who began attacking DAI, and I grew tired of engaging with the Terra community.

Are Stablecoins Signaling an Alarm?

The host asks if UST's decoupling signifies a red flag for all algorithmic and collateralized stablecoins.

Christensen emphasizes that DAI was launched at the market peak in 2017 when Ether was still at $1,300, and at that time, DAI could only be generated with ETH. Even when ETH dropped by 95% and remained low for a period, DAI continued to function well, proving its resilience.

"Maker showcases the advantages of blockchain. Regardless of whether DAI is asset-backed, you don't need to trust anyone. You can directly go to Dai Stats to see real-time reserve audits. All collateral assets that can issue DAI are on the chain."

How Should UST Handle the Aftermath? New Proposal Perspectives

Christensen states:

I believe many people wish they had never touched Terra. It's difficult for everyone to agree on how much compensation each party should receive under the new proposal. However, I think regardless of the proposal, all value should be returned to UST holders as much as possible. Retail investors should always be protected and receive value first.

Opinions on USDT's Slight Decoupling

Christensen seems unclear about the situation with USDT. He mentioned that USDT released a similar audit report in December last year, but he believes it was an informal audit with unclear details, speculating that perhaps due to regulatory reasons, they were unwilling to disclose a complete transparency report.

He points out that users use USDT due to its dominant market position, but some market share is currently being taken by USDC. He firmly believes that USDC is a good stablecoin choice with sufficient asset reserves and security.