Dai cryptocurrency from Maker from the Ethereum ecosystem

Blockchain is confidently gaining business, but the volatility of cryptocurrency is not conducive to settlements between companies in tokens. The need to create a currency pegged to the exchange rate of real assets for settlements is long overdue. Today we are looking at one of these stable coins - Dai.

Team

A large team of almost forty developers, PR employees and business sponsors is involved in the project. The project manager is Rune Kristensen, who has a reputation as a competent specialist. 

Project

Dai is a token created on the Ethereum platform as part of the Maker project. The project is based on a decentralized autonomous platform on which conditions have been created for the MKR token to work together with Dai. The Maker project seeks to solve the problem of linking virtual money to certain values. (in this case, to the dollar) This will allow the use of tokens as a means of payment and reduce volatility, which currently hinders the ability to use cryptocurrency in settlements. Maker maintains the stability of Dai against the dollar. Dai tokens are backed by Collaterized Debt Position (CDP for short). Attracting investment for the project is provided by its own MKR token, and the holders of the MKR coin are essentially shareholders, where the joint-stock company is an organization (DAO). 

An exchange is also being developed on the platform, providing access to margin trading based on collateral positions. 

The system created by the Maker project includes Market exchanges, stablecoin Dai and CDP trading platforms, which creates conditions for fast and anonymous transactions.

Competitors

The idea of ​​​​creating a stable token is not new in the cryptocurrency market. Among the well-known ones is the Steem Dollar token developed for the Steemit social network, which has not received its development. Tether, which has ruined its reputation with accusations of manipulation. DixitDAO, a token pegged to gold, a project that has not yet launched. 

Token

The DAI token, according to the developers, is a stable virtual currency. This currency is called Stablecoin and it has a fixed value. DAI was launched in December 2017, and its rate is pegged 1:1 to the US dollar. At the same time, the “backlash”, the possibility of deviation from the norm, is only 5%, which is acceptable even for fiat currencies.

MKR is a management coin for containing volatility. MKR tokens cannot be mined; they can be purchased on cryptocurrency exchanges. A sufficient number of factors influence the volatility of a token. One of them is a limited edition of 1 million coins.. The first addition to the exchanges took place on January 29 last year. MKR and DAI are traded on cryptocurrency exchanges such as Bitfinex, Bibox and Gate.io. The price of DAI is kept around 1 dollar. 

Disadvantages

Using the Maker platform for trading is very difficult for beginners,  and requires a good knowledge of the Ethereum blockchain and having ETH in your savings. These conditions greatly narrow the circle of potential participants in the system.

The Dai token can only be exchanged for ETH and at a rate that may differ greatly from the global exchange rate at the time of exchange. Another nuance is also unclear: the developers of Dai claim that this token is stable and tied to the dollar exchange rate, which makes it close to fiat in terms of volatility. But creating a collateral position in ETH somehow makes this token directly dependent on the market risks of ether. Therefore, the declared stability seems to us quite conditional in this case.

Summary

The prospects for growth in the value of cryptocurrencies need to be assessed using different mechanisms. In fact, the stated basis of the DAI cryptocurrency is its stability and it has no prospects for growth. At the same time, its popularity directly affects the cost of MKR tokens. An increase in transactions in the DAI network increases the amount of commission for the project itself.

But beginners and traders who are far from the peculiarities of Ethereum smart contracts will need a lot of time to understand the very ornate mechanism for creating and redeeming Dai.