MakerDAO to Support wstETH as Collateral for DAI Minting

Key Updates from MakerDAO Governance Vote

On October 28, 2021, MakerDAO approved a pivotal governance proposal to integrate wstETH (wrapped staked ETH) from Lido Finance as a new collateral type for minting DAI stablecoins. This strategic move expands DeFi interoperability while maintaining rigorous risk parameters:

Approved Proposal Details

• wstETH-A Vault Configuration

  • Initial debt ceiling: 5 million DAI
  • Minimum debt threshold: 10,000 DAI

• Adjustments to Existing Vaults

  • GUNIV3DAIUSDC1-A debt ceiling increased from 10M to 50M DAI
  • Parameter updates for ETH-A, ETH-B, and WBTC-A vaults via Debt Ceiling Instant Access Module

How to Use wstETH with MakerDAO

To leverage this new collateral option, users must follow these steps:

1. Stake ETH via Lido Finance to receive stETH tokens
2. Convert stETH to wstETH using Lido's one-click wrapping feature
3. Deposit wstETH into MakerDAO vaults to mint DAI

👉 Learn more about wstETH collateralization

Note: MakerDAO exclusively supports wstETH—standard stETH cannot be used directly as collateral.

Strategic Implications for DeFi

This integration:

• Enhances liquidity for Ethereum stakers
• Creates new yield opportunities by combining staking rewards with MakerDAO's borrowing capabilities
• Strengthens cross-protocol synergies between MakerDAO and Lido Finance

FAQ Section

Why did MakerDAO choose wstETH over stETH?

wstETH's non-rebasing nature simplifies accounting and integration with MakerDAO's smart contracts, providing more stable collateral valuation.

What risks should users consider?

As with all crypto-collateralized loans, users must monitor:

• Collateralization ratios
• Potential liquidation risks during market volatility
• Smart contract security of both MakerDAO and Lido protocols

👉 Explore risk management strategies

Can I use other LSTs (Liquid Staking Tokens) with MakerDAO?

Currently only wstETH is approved, but future governance votes may add support for additional LSTs like rETH or cbETH.

This update reflects MakerDAO's continued innovation in decentralized finance infrastructure while prioritizing system stability and user security.