The Maker Protocol is a decentralized and community-managed stablecoin pegged to the US Dollar. It runs on Ethereum and other blockchains.
MKR token holders have the power to influence the development of the Protocol through Proposal Contracts. Each proposal can alter one or more internal governance variables.
Dai is a stablecoin
Stablecoins are a type of cryptocurrency linked to a secure reserve asset like the US dollar. These coins aim to reduce volatility in the market and give people peace of mind when trading with confidence and ease.
Dai is a stablecoin created by MakerDAO, an open-source project running the Maker Protocol on the Ethereum blockchain. Through this decentralized application, anyone can create and control Dai, which then can be used for repayment loans, paying the stability fee or taking part in debt auctions within the Maker Ecosystem.
The Maker Protocol utilizes an automated system of smart contracts to execute all transactions in Dai. This is known as the Target Rate Feedback Mechanism (TRFM), which strives to maintain a value of $1 for Dai at all times.
The Maker Protocol utilizes a system of Key External Actors, such as Oracles and Global Settlers, that are incentivized to help maintain Dai’s stability by making sure it never gets compromised. They profit by trading Dai, selling when its market price exceeds Target Price and buying when its lower than Target Price; this creates supply and decreases demand, eventually leading to Dai returning to its Target Price.
Dai is a decentralized stablecoin
The Dai stablecoin (DAI), ticker DAI, is a crypto-backed token soft-pegged to the US dollar and managed by smart contracts. As such, it offers USD stability without the volatility associated with traditional fiat-collateralized stablecoins such as Tether (USDT) or True USD.
Dai utilizes game theory to encourage users to keep the price near $1. This is made possible through the Maker protocol and MKR governance token.
MKR holders have the power to influence monetary policy, such as accepted collateral type and stability fees, by voting on issues like debt auctions. These decisions have the potential to make or break Dai’s stability, keeping it a trusted crypto asset.
DAI also features a Target Rate Feedback Mechanism (TRFM), which adjusts according to market supply and demand changes. If the TRFM detects that Dai’s market price has deviated from its Target Rate by any amount, it will automatically incentivize users to increase the value of Dai.
Dai is a medium of exchange
Dai is a global medium of exchange that’s used for all manners of transactions. Additionally, dai acts as an excellent store of value, maintaining its value despite market fluctuations.
As a medium of exchange, Bitcoin serves numerous uses cases and applications, such as payment settlements and price tracking within the Maker Protocol. Furthermore, it functions as an account unit in some decentralized dapps which promotes economic inclusion by giving millions who lack banking access the power to become self-sufficient entrepreneurs.
To generate Dai, users deposit their native Ethereum cryptocurrency (ETH) into Maker Vaults. These vaults secure ETH into a smart contract that automatically creates DAI when the collateral is paid back.
Dai is a store of value
Dai is a stablecoin that offers investors a secure source of value. It can be traded on exchanges and used for payments as well as savings accounts.
MakerDAO launched Dai in 2014, using the Maker Protocol – a decentralized application on the Ethereum blockchain. Users can generate Dai by collateralizing it with ETH or other supported cryptocurrencies.
At present, it supports a number of currencies including BAT, USDC, WBTC and TUSD. Furthermore, it takes Pooled Ether (PETH) as collateral for CDPs.
Users depositing crypto-assets into a Maker Vault will receive Dai as compensation. With this token, they can borrow from others or trade it for profit.
