MKR as Collateral for DAI Proposal, L2 Interoperability Competition Heats Up

Market Update Traditional markets opened sharply lower today following higher YoY PCE data (5.4% in January vs 5.3% in December). With the Fed looking at PCE as their preferred gauge of inflation, the higher print incites fears that they will likely have to do more to cool price pressures. $SPX and $QQQ have opened and subsequently bled lower from yesterday's close, trading at -1.5% and -2.0% at the time of writing. With correlations to traditional markets tightening again, $BTC and $ETH are also down 2.2% and 3.0% over the last day. Amongst the top 100, $STX has appreciated the most in the past week, gaining 124%. Ordinal NFTs have brought excitement back to the bitcoin space, with Stacks well-positioned as a smart contract L2 to capitalize on it. While $STX has certainly moved, the valuation multiple of $ETH versus its most dominant sidechain $MATIC perhaps suggests that it has more room to go.MakerDAO co-founder Rune proposed for $MKR to be used as collateral for minting its $DAI stablecoin in his Endgame Proposal. The proposal triggered an ambivalent response from the community, given its resemblance to $LUNA/$UST's algorithmic redemption/minting mechanism. If risk-parameterized appropriately (not 100% collateralized), however, the update can be executed a la Frax Financ