Surely everyone in the crypto market knows about stablecoins, a stable cryptocurrency. This is a digital currency developed on Blockchain and has a stable value. The price of Stablecoins is pegged to another stable asset such as fiat money (USD, EUR, VND). Stablecoins are considered a promising solution that can replace traditional payment systems. Currently, the value of Cryptocurrencies, especially Bitcoin, fluctuates every day. However, Stablecoins guarantee a stable and global price, independent of a central bank. Some notable coins such as: USDT, BUSD, USDC and DAI are also among them. However, unlike other stablecoins, DAI has a different way of operating. Let’s find out with us.
What Is DAI ($DAI)?
DAI is an Ethereum-based stablecoin (stable-price cryptocurrency) whose issuance and development is managed by the Maker Protocol and the MakerDAO decentralized autonomous organization. The price of DAI is soft-pegged to the U.S. dollar and is collateralized by a mix of other cryptocurrencies that are deposited into smart-contract vaults every time new DAI is minted. Dai is easy to generate, access, and use.
MakerDAO is a smart contract platform, built inside the Ethereum blockchain network. Marker allows ETH holders in their ecosystem to exchange private assets for DAI Stablecoins through smart contracts. In other words, users can mortgage assets in exchange for DAI. Others obtain Dai by buying it from brokers or exchanges, or simply by receiving it as a means of payment.DAI Stablecoin or DAI ecosystem includes DAI Stablecoin (DAI) and MakerDAO (MKR). This platform operates to create one stablecoin in MakerDAO & DAI ecosystem.
Every Dai in circulation is directly backed by excess collateral, meaning that the value of the collateral is higher than the value of the Dai debt, and all Dai transactions are publicly viewable on the Ethereum blockchain.
Outstanding Features
What is the project trying to achieve?
Dai as a Store of Value
A store of value is an asset that keeps its value without significant depreciation over time. Because Dai is a stablecoin, it is designed to function as a store of value even in a volatile market.
Dai as a Medium of Exchange
A medium of exchange is anything that represents a standard of value and is used to facilitate the sale, purchase, or exchange (trade) of goods or services. The Dai stablecoin is used around the world for all types of transactional purposes.
Dai as a Unit of Account
A unit of account is a standardized measurement of value used to price goods and services. Currently, Dai has a target price of 1USD (1 Dai = 1 USD). While Dai is not used as a standard measurement of value in the off-chain world, it functions as a unit of account within the Maker Protocol and some blockchain dapps, whereby Maker Protocol accounting or pricing of dapp services is in Dai rather than a fiat currency like USD.
Dai as a Standard of Deferred Payment
Dai is used to settle debts within the Maker Protocol (e.g., users use Dai to pay the stability fee and close their Vaults). This benefit separates Dai from other stablecoins.
Collateral Assets
Dai is generated, backed, and kept stable through collateral assets that are deposited into Maker Vaults on the Maker Protocol. A collateral asset is a digital asset that MKR holders have voted to accept into the Protocol.
How to Generate Dai?
One of the defining features of DAI is that it wasn’t created by any single person or a small group of co-founders. Instead, the development of the software that powers it and the issuance of new tokens is governed by the MakerDAO and Maker Protocol.
MakerDAO is a decentralized autonomous organization — a kind of company that runs itself in a decentralized manner via the use of smart contracts — self-enforcing agreements expressed in software code and executed on the Ethereum blockchain. MakerDAO itself was originally founded by a Danish entrepreneur Rune Christensen in 2015.
This organization is managed democratically by the holders of its Maker (MKR) governance tokens, which act similarly to a traditional company’s stock; MKR holders can vote on key decisions regarding the development of MakerDAO, Maker Protocol and DAI, with their voting power being proportionate to the amount of Maker tokens they own.
Maker Protocol built on the Ethereum blockchain, enables users to create currency. Current elements of the Maker Protocol are the Dai stablecoin, Maker Collateral Vaults, Oracles, and Voting. MakerDAO governs the Maker Protocol by deciding on key parameters (e.g., stability fees, collateral types/rates, etc.) through the voting power of MKR holders.
Technically, they all focus on margin trading using ETH into collateralized debt positions (CDPs) and Maker Vaults.
So what is CDP?
CDP – Collateralized Debt Position is the position created by locking collateral in MakerDAO’s smart contract to generate its decentralized stablecoin, DAI. This system was introduced to the decentralized finance world by the MakerDAO team and is how its decentralized stablecoin DAI is created.
The value of the collateral locked in a CDP needs always to exceed 150% of the value of DAI that it was used to generate. If a position becomes undercollateralized, the assets locked in the smart contract get sold to pay back for the DAI generated, a 13% liquidation penalty and the stability fees (currently at 8.5% per year.) The generated DAI is basically a decentralized loan backed by the value of the collateral; in order to unlock the collateral, a user needs to pay back the DAI generated plus the stability fees. Each of the DAI stablecoins is in circulation.
What is Maker Vaults?
All accepted collateral assets can be leveraged to generate Dai in the Maker Protocol through smart contracts called Maker Vaults. Users can access the Maker Protocol and create Vaults through a number of different user interfaces (i.e., network access portals), including Oasis Borrow and various interfaces built by the community. Creating a Vault is not complicated, but generating Dai does create an obligation to repay the Dai, along with a Stability Fee, in order to withdraw the collateral leveraged and locked inside a Vault.
Vaults are inherently non-custodial: Users interact with Vaults and the Maker Protocol directly, and each user has complete and independent control over their deposited collateral as long the value of that collateral doesn’t fall below the required minimum level (the Liquidation Ratio, discussed in detail below).
Steps to Generate DAI from Marker DAO & Marker Protocol via CDP
- Step 1: You send one transaction to the MakerDAO system to request the creation of CDP.
- Step 2: Mortgage property (an amount of property you want) to borrow the corresponding DAI number. Now, having deposited assets into the system, CDP will hold and lock our assets until the debt is paid. Remember that: The value of the collateral locked in a CDP needs always to exceed 150% of the value of DAI that it was used to generate.
- Step 3: You need to send one more transaction to request the system for the amount of DAI you want (corresponding to the amount of collateral)
- Step 4: When you want to get your collateral back, you must return the original borrowed DAI amount to MakerDAO along with a part of the stability fee, this fee will be calculated based on the time you borrow DAI of the system. You can use MKR or DAI to pay.
- Step 5: The system will return the CDP of the user who originally requested it, and open their collateral. At this point, they have full control over the CDP, being able to withdraw all or part of the collateral.
Technical Data
Token Metrics
- Ticker: DAI
- Blockchain: Ethereum
- Smart contract: 0x89d24a6b4ccb1b6faa2625fe562bdd9a23260359
- Decimal: 18
- Token Standard: ERC-20
- Token type: Stable Token
- Circulating Supply: 9,066,311,687 DAI
- 1 DAI = 1 USD
You can update the price of DAI Token on Coincu.com at: CLICK HERE
Token Sale
DAI is stable coin mining with collateral, so to own it you can mint DAI or buy DAI at some CEX and DEX exchanges like: Binance, Coinbase, Uniswap
More information at: CLICK HERE
Token Use Case
DAI is a Stablecoin created inside the MakerDAO ecosystem. Acts as a stable coin. When users deposit their collateral inside the MakerDAO system and receive the corresponding DAI in return, users can use DAI for any purpose they desire.
Market and Community
Market
Currently in the crypto, stable coin is an indispensable token like fiat currency in the traditional market. Each stable coin will have different advantages to serve users, but what is essential is stability.
Community
MarkerDao has 209.2K Followers on Twitter
Backers
Team
Partners & Investors
Some famous ones include A16Z, Polychain capital, 1Confirmation..
Verdict
With the above analysis, Maker &DAI has a good chance to surpass Tether to become the largest stable coin of choice in the crypto space. Although it is currently facing the cooperation of many other stablecoins in development. Over here, Coincu has provided you with the most basic information about MakerDAO and DAI token, hope you have made your own investment decision.
Find more information about MarkerDao:
Website: https://makerdao.com/vi/
Twitter: https://twitter.com/MakerDAO
Explorers: CLICK HERE
If you have any questions, comments, suggestions, or ideas about the project, please email [email protected].
DISCLAIMER: The Information on this website is provided as general market commentary, and does not constitute investment advice. We encourage you to do your own research before investing.
Alan
Coincu Ventures
