MakerDAO To Invest On StarkNet With ×10 Low Gas Fees

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MakerDAO, a DeFi type of “blue chip” plan, is expanding its connection with StarkNet in order to reduce transaction fees and accelerate withdrawal’s time.

Today, MakerDAO, which is the decentralized organizations (DAO) that is responsible for the DAI stablecoins, revealed that the protocol will soon be deployed on Ethereum’s 2nd layer scale solution, known as StarkNet. The official launch date is set for 28th of April.

MakerDAO, widely regarded as a significant participant in decentralized finances (DeFi), is a smart contracts-based network for lending off and borrowing cryptocurrency that eliminates the need for third-party brokers.

MakerDAO’s network is developed on the Ether blockchain network and includes two currencies: DAI, a stablecoin, and Maker (MKR), the network’s governance coin.

MakerDAO’s integration with StarkNet marks the first time the system has been used to launch on Ethereum merge that have been constructed using the zero-knowledge (ZK) technologies, according to the company.

Rollups allow transactions to be settled outside of the main blockchain, reducing congestion on the mainnet and allowing for faster transaction speeds without compromising overall security and reliability.

StarkNet

StarkNet, developed by the Israeli owned company StarkWare, is a 2-layer scalability alternative for the Ether blockchain network.

In particular, it makes use of an encryption technique known as ZK merges or rollups, which allows blockchain networks such as Ethereum to handle massive batches of transactions fast and inexpensively. Furthermore, because it makes use of the zero-knowledge type technology, they are able to protect a considerable percentage of their consumers’ privacy.

When speaking with Decrypt, the MakerDAO development team underlined that the protocol’s connection with StarkNet will result in a significant decrease in the price of DAI operations and minting when matched to the Ether mainnet.

More information on the subject was provided by Louis Baudoin, a member of MakerDAO’s StarkNet Core Unit, who told the Decrypt that “Maker’s gases prices are being taken over by exchanges being associated to minting and also by trading related to the oracle costs,” and that “once the Multi-Collaterals DAI (MCD) is imputed on StarkNet, we can anticipate the exchanges associated to minting to cost ten times less on StarkNet than on Ether mainnet.

Last year’s integrations with “optimistic rollup” networks Arbitrum and Optimism were followed by today’s announcement, which is part of the protocol team’s multichain plan. Optimistic rollups are similar to ZK rollups in that they transfer transaction data from the layer-2 network to the mainnet, but they differ in the manner in which the data is relayed to the mainnet.

The goal of this multichain method is to make both DAI and Maker Vaults—the mechanism that allows users to deposit collateral and generate DAI—as widely available as possible on as many layer-2 scaling solution protocols as feasible.

According to Baudoin, “when untenable gas fees push more activities and users to a larger range of blockchains, the security challenges associated with bridging will continue to develop.” MakerDAO and StarkNet are collaborating to ensure that projects are likely to progress to serve customers at the next layer of the OSI model.

Cash Out And Minting Speed Up

The possibility for users to make faster withdrawals and shorten DAI minting times are two other advantages of deploying on StarkNet, according to Baudoin, in addition to the opportunity to lower transaction fees.

The former is made possible by the Maker Wormhole, which is the Ethereum protocol’s solution for “almost instantaneous teleportation of DAI” throughout the Ethereum ecosystem and beyond.

The Maker Wormhole makes use of a “burn-and-mint” method to allow for almost rapid withdrawals and “aims to resolve the issue of transferring DAI from one layer 2 to another in minutes,” according to Baudoin, who developed the device. “It allows withdrawals in minutes rather than hours (as is presently the case on StarkNet) or days (as is currently the case on Optimism).”

Regarding the reduction of DAI minting time, Baudoin stated that users can execute transactions on StarkNet in one to two minutes, but finality on Ethereum’s mainnet takes between three and eight hours.

According to Baudoin, the goal for StarkNet is to reduce transaction times to a few seconds or less within the next calendar year. “From a cost aspect, users can perform transactions on StarkNet at a cost that is approximately ten times less expensive than that of Ethereum layer 1 transactions.”


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