![]() Such a decision is in the hands of MKR token holders. Nonetheless, it has the potential to be so, if its collateralization structure shifts away from centralized stablecoins like USDC or USDT. ![]() Conversely, USD Coin is the most used centralized stablecoin because it is 100% backed by USD cash reserves or equivalents.Īs a result, DAI is far from being decentralized. Therefore, they are least prone to wild price swings that could affect DAI’s one-to-one peg to the dollar. The reason for this allocation is that both Ethereum and Bitcoin are cryptocurrencies with the largest market caps. Typically, investors add USDC to mint new DAI, alongside Wrapped Bitcoin and Ethereum.ĭAI’s collateralization allocation by types of crypto assets. In turn, the newly minted Dai stablecoin is collateralized by the crypto asset provided. Therefore, Maker Vaults serve as liquidity pools to collateralize Dai stablecoin.Īfter liquidity is added into Maker Vaults, they mint new DAI stablecoins. These are token repositories in which investors add liquidity. Maker protocol uses smart contracts to create Maker Vaults. ![]() Consequently, Maker’s entire lending ecosystem revolves around DAI. Maker’s Dai (DAI) Stablecoinįor any blockchain lending service to be reliable, the collateral used for loans must be stable. In November 2019, MakerDAO upgraded DAI issuance so it’s backed by dozens of crypto assets but mainly by USDC stablecoin. MakerDAO’s key product is Dai stablecoin, launched in December 2017 and collateralized by Ethereum. Due to disagreements on how the funds should be allocated, five out of nine of its board members were fired by Christensen. This fund oversees MKR token treasury to spur MakerDAO ecosystem adoption. In late 2018, Maker Foundation established Maker Ecosystem Growth Fund (MEGF). This transition is ongoing, and it has had some mishaps. Looking for Alpha? Become a premium member of The Defiant and join our DeFi Alpha community. It used MKR as a governance token that grants voting rights on all aspects of Maker’s management and development. Source: DeFiLlamaįrom this centralized beginning, the Maker Foundation gradually turned over its control to MakerDAO, the decentralized governing body for the Maker protocol. To do so, Maker deploys smart contracts that automate loan issuance and debt/stablecoin collateralization.Īt its peak in December 2021, MakerDAO ecosystem comprised the bulk of Ethereum’s TVL. Specifically, Maker’s mission is to generate and maintain a stable on-chain digital asset pegged to the value of the dollar - the DAI stablecoin. It was a coordinating body for programmers and started Maker, an open-source project to spearhead a completely decentralized and permissionless banking system without banks. Inspired by the Ethereum Foundation, he launched the Maker Foundation in 2017. He is a Danish entrepreneur who studied at the University of Copenhagen. In 2014, Rune Christensen created MakerDAO for the Maker ecosystem. The Maker protocol was in the DeFi vanguard. The most popular by far are dApps for lending, borrowing, and token swapping because these services can be executed without the need of intermediaries such as banks or credit scoring outfits. As one of the most valuable and widely used platforms in DeFi, investors and crypto users are closely watching how Maker’s governance and operational model evolves.Įver since Ethereum went live in 2015, it has become the host of hundreds of decentralized applications (dApps). MakerDAO is a cooperative organization that manages the Maker protocol. Maker, a crypto lender, is one of the pioneers of decentralized finance (DeFi), Maker uses smart contracts on the Ethereum blockchain to make loans based on DAI, a stablecoin.
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