MultiCollateral

MultiCollateral is a framework within the MakerDAO system that allows the stablecoin Dai to be issued against multiple types of collateral rather than a single asset. By enabling a plurality of accepted assets, MultiCollateral aims to diversify risk and expand the range of assets that can back Dai, supporting a broader and more flexible decentralized finance ecosystem.

Mechanically, users lock collateral in a vault and generate Dai up to a collateralization threshold. Each collateral type has its own risk parameters, including debt ceilings, stability fees (annualized borrowing costs), and liquidation ratios. The system relies on price feeds from oracles to determine the real-time value of collateral and trigger liquidations if the collateral falls too far in value. Vaults are managed through governance-enabled processes, which can add new collateral types, adjust parameters, and refine risk controls.

Governance is a core aspect of MultiCollateral. MakerDAO token holders and the community propose and vote on changes to supported collateral types, risk parameters, and system-wide policies. This decentralized governance model allows the system to adapt to market conditions by expanding or pruning the set of acceptable assets and by calibrating incentives to maintain stability.

Benefits of MultiCollateral include diversification of collateral risk, increased flexibility for users, and the potential to grow Dai’s utility across different markets and assets. Challenges involve managing counterparty risk across diverse assets, maintaining system stability during rapid market swings, and ensuring that risk controls keep pace with new collateral types.

As an evolution of the earlier single-collateral approach, MultiCollateral represents a scalable path for Dai issuance, allowing broader participation and resilience through multiple asset backings.