MakerDAO platform and Stablecoin DAI

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Stablecoin DAI is currently over $6 billion in issuance, making it the fourth largest stablecoin on the crypto market. Today we take a look at the platform and learn how it issues DAI.

This is an Ethereum-based smart contract platform that allows the issuance of Stablecoin DAI against cryptocurrencies and real assets. The platform ranks first among Ethereum ecosystem DeFi-protocols regarding blockchain liquidity (~$8 billion at the end of October 2022). Also note the CUSDC price charts.

The platform operates and develops on a fully decentralized basis with DAO. And if you are interested in CUSDC Coin news, go to letizo.com.

Maker token price (MKR)

The platform’s management token is MKR, an ERC-20 token that is used to vote on the risk management and business logic of the platform.

MKR is also used to redeem commissions increased for using smart contracts that Stablecoins DAI generates. The platform’s smart contracts can be used exclusively with MKR (a kind of fuel). It is also worth noting that MKR is a deflationary asset. Therefore, Maker price predictions can be given positive. Part of the commissions are regularly burned.

Stablecoin DAI

The developers managed to create a unique Stablecoin called DAI. Unlike centralized projects, it is entirely based on Ethereum smart contracts. Stablecoins DAI is issued by the users of the protocol themselves. To do so, they must lock in a special smart contract called Vault a certain amount of cryptocurrency as collateral. In return, they receive a certain amount of Dai in a certain ratio to the blocked cryptocurrencies.

In the first version, only ETH could be deposited as collateral and the collateral rate was 150%. This meant that $100 worth of DAI could be issued against $150 worth of ether coins as collateral. Like the CUSDC to USD rate, tokens from this project could also be sold for fiat on any exchange.

In November 2019, the project community decided to switch to a multicollateral system – that is, to allow users to use different cryptocurrencies (ETH, USDC, WBTC, LINK, MATIC and several others) as collateral. And in July 2022, project became the first DeFi-protocol to pledge shares of public companies.

Comparison with centralized Stablecoins

Maker prices now are on the rise. While USDC and USDT are mostly backed by U.S. dollars held in bank accounts, DAI has mostly cryptocurrency collateral (which is not as secure). But at the same time DAI has one significant advantage – this stable currency works without discrimination (the risk of account blocking is almost zero, unlike USDC and USDT).