Aave, a lending protocol, has introduced a new proposal through its Aave Risk Framework Committee (ARFC) to adjust the risk parameters associated with the Dai (DAI) stablecoin.

The proposal, put forth by the Aave Chan Initiative (ACI) team, suggests setting Dai's loan-to-value ratio (LTV) to 0% across all Aave deployments. Additionally, the proposal recommends removing sDAI incentives from the Merit program, starting from Merit Round 2 and onwards.

This move aims to counter MakerDAO's aggressive D3M plan, which significantly increased the DAI credit line from zero to an estimated 600 million DAI in a short period, potentially reaching 1 billion DAI soon. The objective of the proposal is to mitigate potential risks while causing minimal disruption to users.

This is because only a fraction of DAI deposits serve as collateral on Aave, and users have the option to switch to alternative collateral options like USD Coin (USDC) or Tether (USDT). The proposal also highlights the risks associated with unstable minting practices, citing an example involving Angle's AgEUR (EURA), which was hacked shortly after being minted into EULER. Furthermore, MakerDAO is gearing up to launch its "Endgame" transformation, aiming to steer the platform towards scalable resilience and sustainable user growth.

This initiative involves a five-phase plan, with the first phase set for mid-2024, focusing on rebranding the operation for clarity and appeal. The overarching goal of the Endgame is to elevate the decentralized stablecoin DAI's market capitalization from $4.5 billion to "100 billion and beyond," akin to Tether's USDT.

MakerDAO plans to re-denominate each Maker (MKR) token into 24,000 NewGovTokens and offer farming opportunities for NewStable tokenholders. Eigenlayer recently surpassed Aave to become the second-largest DeFi protocol, with a total value locked (TVL) of $11.5 billion, trailing only behind Ethereum liquid staking protocol Lido.

Despite this, Aave boasts over 5,700 daily active users, significantly more than Lido's under 430 users, according to Token Terminal data.