The DAI cryptocurrency is the first DAO Maker product on the Ethereum blockchain. Dai is a stablecoin pegged to the U.S. dollar.
Maker has its own cryptocurrency, MKR. It performs a management function in the organization and is only indirectly related to Dai. The history of DAO Maker starts with a small team, which now consists of 33 people. Dai is the first product to fulfill Maker’s vision of a fully decentralized, transparent, and autonomous crypto-economy. Today, you can exchange dai on fantom profitably.
Strengthening Dai (DAI)
The advantage of stablecoins is obvious and lies in the convenience of cryptocurrency, along with a stable price. The disadvantage is that such cryptocurrencies have additional risks inherent only to them. Dai differs from the most common stablecoin, Tether (USDT).
Automation and full transparency
At any time, anyone can access all the information about the state of the Dai ecosystem. Unlike Tether (USDT) and True USD (TUSD), there is no doubt whether Dai is backed by real assets, to what extent, whether these assets are available for conversion, etc. All information is open and transparent.
The process of creating and redeeming a Dai is also automated. No one can interfere with it within the parameters set by the system. The parameters themselves are determined by a vote of the owners of MKR tokens.
Dai creation and redemption mechanism
Dai are created and redeemed by the users of the system themselves. To create a Dai, a user must first create a Collateralized Debt Position (CDP) by sending their ETH to a special smart contract address.
Collateralized debt positions have risk indicators that, when reached, the position is forcibly closed. This maintains the stability of the collateral, ensuring that the Dai rate is pegged to the USD. The values of each of the indicators are determined by a vote by MKR token holders. These indicators are:
- Debt Ceiling: The maximum amount of debt that can be created by one type of collateral position.
- The Liquidation Ratio is the threshold value of the ratio of collateral value to current debt in Dai, after which the position will be vulnerable to liquidation. This ratio is currently at 150%.
- The stability fee is currently equal to 0.5%.
- The liquidation penalty is paid by the creator of the position when the liquidation ratio for his position has been reached. The amount is 13%.
Why would anyone create such a collateralized position? So you take a margin position on ETH. If the rate goes up, you will make money. At the same time, you can use the resulting Dai for other purposes.
Dai (DAI) Forecast and Prospects
Maker DAO has done an impressive job. It is the first real alternative to centralized stable coins like Tether (USDT), about which the entire cryptosphere has accumulated a lot of questions. Dai exists only on the blockchain. It uses an arsenal of mechanisms to ensure stability. The project provides overcoverage of its bindings and is fully transparent and decentralized. The list of advantages is impressive.
One should keep in mind the disadvantages of the system. They consist of excessive complexity and untested in real market situations of mechanisms that provide stability.
The forecast and prospects for Dai and Maker DAO look good. It makes sense to buy this cryptocurrency at Alligat0r.com. One can be sure of Dai’s stable price and constant increased demand for MKR ecosystem management tokens.