MakerDAO has been working towards creating a cryptocurrency that will support a stable, decentralized digital global economy. The result is Dai, the first fully-decentralized stablecoin on Ethereum.
MakerDAO was formed three years ago with a big vision of creating a stable, decentralized digital global economy. It has worked its way out of the grassroots to finally launch Dai, a promising cryptocurrency that promises stability in currency valuation.
Understanding Dai’s Valuation
Dai is currently worth 1 USD. It is designed to have low volatility against the world’s leading national currencies, such as the Euro and USD. MakerDAO has two mechanisms to ensure that this happens.
For starters, Dai has an autonomous system of smart contracts that monitors the market’s dynamics and responds accordingly. This system is designed to be independent so that no one can alter its mechanism. As such, even MakerDAO cannot alter the system, hence ensuring that no one can manipulate Dai’s value for self-gain while inconveniencing other Dai users.
Secondly, Dai is backed a secured asset that is held in the Maker smart contract. Initially, this collateral will be pooled Ether that users will hand over to generate Dai. Users can retrieve their collateral by paying off the debt of the Dai that they initially received as well as a minor stability fee.
Unlike Bitcoin, which you have to mine or purchase, you can get Dai coins by either making them or buying them. To create Dai, you have to log onto the MakerDAO platform and send Ether to the Collateralized Debt Position (CDP). Making Dai is quite easy, and you can learn more about it here.
You can also always buy Dai coins if you are not in a position to create one. You can always find Dai sellers here.
Take Advantage of Dai
Dai promises to be a stable currency for all uses, especially now that global currencies can be so volatile. It is ideal for people seeking to secure their finances as well as those seeking to take advantage of the booming popularity of digital currencies. Many people are excited of the potential of Dai. Joey Krug, the co-founder of Augur, said:
When people ask me what the biggest remaining challenges in the space are I tell them scalability and stablecoins. I’m really excited about Maker and Dai as I think stablecoins are key to any sort of financial contracts on Ethereum. Even if you’re right, but still have the volatility of Ether, you can’t speculate on many long term speculative events. I’m excited to be able to use Dai within Augur’s markets!
Dai is still in its early stages, and its stability is expected to attract many users in the near future. The MakerDAO team is still working to improve the currency, and you can keep track of the development here. You can also get in touch with the brains behind Dai here.
Do you think that Dai will live up to its expectations? Would you invest in Dai? Share your thoughts in the comments below.
Images courtesy of Dai Foundation and Pixabay.