The stablecoin world is more alive now than it has ever been. Maker is a smart contract platform on Ethereum that supports and preserves the utility of Dai through a progressive method of Collateralized Debt Positions (CDPs), independent feedback mechanisms. CryptoTicker recently spoke with Gustav Arentoft, who works in business development for MakerDAO to know and understand more about how MakerDAO could change the crypto space?
The MakerDAO was founded by Rune Christensen in the year 2014. It is a non-profit organization that is accountable for the launch of two cryptocurrencies called Maker (MKR) and DAI. MKR is the governance token based on the Ethereum. It gives voting rights to the financing policy that is applied to create Dai. DAI is a decentralized stablecoins that is collateralized and issued based on confirmed applications for loans.
How MakerDAO will change the world of Crypto?
In MakerDAO both private investors and businesses can tokenize their assets and then loan them out. The interesting thing is that it is not MakerDAO that tokenizes the assets. The asset keepers have this responsibility.
The price of cryptocurrencies like Bitcoin and other prominent altcoins are too volatile. That’s why MakerDAO has come up with stablecoin Dai. It preserves a 1:1 value with the dollar.
The Maker platform includes two coins: Makercoin (MKR) and Dai (DAI).
- Makercoin(MKR): The MKR is not a stablecoin. The main purpose of MKR is to govern the Maker Platform.
- Dai (DAI): The DAI is the stablecoin. This stablecoin is suitable for payments, savings, or collateral.
Unlike other stablecoins the price of Dai isn’t backed by fiat money. Dai’s value is secured by the Maker platform which utilizes smart contracts to support the price of Dai together with a notable amount of the cryptocurrency Ethereum as backing.
Example: The Dai Stablecoin System can be utilized by anyone without any limitations/constraints or sign-up method.
Maria needs a credit/loan, so she decides to make 60 Dai. Now, she secures an amount of ETH worth more than 60 Dai into a CDP and applies it to create 60 Dai. The 60 Dai is immediately transferred to her Ethereum account. Now, considering that the Stability Fee is 1% per year, She will need 61 Dai to meet the CDP if she chooses to reclaim her ETH one year later.
The complete interview:
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