The rise of decentralized finance (DeFi) has introduced a multitude of new concepts. Among these innovative concepts, flash loans have quickly stood out, becoming a must-have tool for many traders.
“Multiply”: the new feature of MarkerDAO
MakerDAO is a cornerstone protocol of DeFi on Ethereum (DeFi). The latter issues DAI, the fourth most widely used stablecoin in the crypto ecosystem.
Last month, the protocol announced an update to its Oasis.app, with the release of a new feature called “Multiply”. Until now, users were able to generate IADs, by depositing other assets on the protocol. With Multiply, MakerDAO is evolving this system, allowing leverage on this type of position.
“You can deposit your collateral now and get up to 4 times the value of your ETH, in the same way as leveraged trading, while maintaining the security of the Maker protocol.”MakerDAO announcement
As a result, user has the ability to deposit collateral in a vault to generate IADs themselves as a source of funding to purchase more collateral, thus multiplying their exposure to the asset.
This solution has several advantages. First and foremost, it allows users to generate leveraged positions on MakerDAO. Secondly, it reduces the number of transactions to achieve that leverage.
“To create the multiple positions, we combine 3 proven technologies to provide you with an exceptional trading experience: the Maker smart contracts, the 1inch DEX aggregator and Aave’s flash loans.”MakerDAO announcement
MarkerDAO takes on flash loans
A little over a month after the launch of Multiply, MakerDAO has just announced a change in the way it works. An internal MakerDAO feature called “DAI Flash Mint” now replaces the flash loan contracted on Aave.
In practice, DAI Flash Mint is nothing more than a flash loan service on MakerDAO. However, this feature differs in its operation from other flash loans services.
“This module allows anyone to create up to 500,000 DAI in any transaction, with the sole condition of repaying that momentary loan in the same transaction.”MakerDAO announcement
What’s more, this module is completely free of charge as part of Multiply. In addition, the cost of using Multiply is reduced by almost 30%.
“Since Maker has completely waived the fees for this module, our users will get these flash mints for free. As a result, you no longer pay an additional 0.09% for the flash loan, but you pay 0% for the flash mint in your Multiply transactions – saving users up to 30% of their total fees.”MakerDAO announcement
The news about MakerDAO is going strong. Back in April, the protocol had also announced a change to its settlement system. As a reminder, this one had been messed up a year earlier during Black Thursday.