Maker’s Teleport bridge (formerly Wormhole) is scheduled to go live soon. The first phase is DAI fast withdrawals. It’s our belief that Maker’s Teleport bridge presents both opportunities for collaboration as well as possible competition. Hop DAO should discuss the implications of this launch and how Hop should coexist with a natively bridgeable DAI. Friend of foe?
Maker’s Teleport adds bridging functionality natively to DAI by allowing it to be burned and minted by a multisig made up of the signers of Maker’s price feeds. The Teleport bridge will likely take market share away from Hop’s DAI bridge because Maker’s cost of capital for DAI is 0 and can therefore charge 0 fees as long as end users pay for gas.
While the initial rollout will only allow for fast withdrawals of DAI to layer-1, there are plans to enable L2 <> L2 transfers in the future and possibly expand to bridging other stablecoins in the Peg Stability Module, including USDC.
Maker’s Growth Core Unit has expressed interest in providing a grant for Maker Teleport to be integrated into the Hop UI. In this case, it would likely make sense to sunset the Hop DAI bridge immediately or when Teleport enables L2 <> L2 transfers. If Maker were to charge a fee eventually, some of the revenue could be kicked back from Maker to Hop DAO.
There may also be opportunities for Hop to integrate more deeply with Teleport at the contract level. This could take a few forms:
- Features could be built on top of Teleport, adding functionality
- If Hop opens up its trustless messaging layer in the future, Maker could use it to limit the liability Teleport presents and improve its trust model.
It’s not clear whether Maker is interested in this type of collaboration or is more interested in owning the whole stack.
Maker’s Teleport presents serious competition for Hop’s DAI bridge and possibly the USDC bridge eventually as well. It may make sense to rethink our relationship with DAI/Maker and consider them direct competition rather than an aligned party.
This could take the form of sunsetting DAI support or attempting to compete with the Teleport bridge for market share. Hop will likely be much cheaper from a gas efficiency standpoint and could still be the best option for all but very large transfers. It also may take a long time for Teleport to support L2 <> L2 transfers.
Maker’s Teleport is a multisig bridge in its current form. While Maker’s oracles have been historically reliable, this trust model still relies on off-chain parties to secure their keys, and its security can’t be independently verified. While we trust the Maker team and community members to follow best practices and take the utmost care, we have seen how suddenly devastating it can be when multisig keys are compromised, as was the case in the Ronin and Harmony bridge hacks.
The Hop DAI bridge bonder returns are decent when volume is relatively good and sub-par when it is not. The AMM liquidity is on the low end but not as low as USDT currently is. If Hop continues to support DAI, it will likely be necessary to introduce light HOP incentives for both the AMMs and bonder liquidity to keep the bridge efficient and the bonder interested.