What is MakerDAO (MKR)?
MakerDAO —— A Decentralized Stablecoin Platform on Ethereum
- MakerDAO is a decentralized stablecoin platform, operating on the Ethereum blockchain.
- By staking the MKR token, users can vote on network specs and governance initiatives, including the stability fee, collateralization rates, and assets allowed to be used as collateral, etc.
- Users may deposit predetermined assets as collateral against which they may print the DAI stablecoin.
- The MakerDAO platform has built an infrastructure that aims to stabilize the price of DAI at 1 USD.
- When a user decides to deposit DAI stablecoins into his Vault and withdraw his collateral, he is also required to pay an interest, or stability fee, to the network.
MakerDAO Key Metrics
MakerDAO is a decentralized autonomous organization (DAO) that exists on the Ethereum blockchain. The platform uses a self-balancing system to create a stablecoin that avoids the regulatory issues that have hindered the success of other similar projects. To generate and manage this system, MakerDAO created two tokens:
Maker (MKR)—a token used to govern the platform and pay stability fees
Dai (DAI)—a crypto-collateralized stablecoin that is targeted to the U.S. dollar
MakerDAO ensures the stability of the dai through the implementation of a decentralized governance system that is conducted via the staking of maker tokens for the period of time during which a vote occurs. Additionally, the fees needed to stabilize the dai are managed and paid through the maker token.
To create dai, users lock up ether in smart contracts called “collateralized debt positions" (CDPs) that mint dai, loan those dai to CDP creators, and hold their locked ether as collateral.
The Maker Protocol allows users to generate Dai using assets approved by "Maker Governance" as collateral. Maker Governance is a set of processes organized and operated by the community to manage all aspects of the Maker protocol.
Project realization mechanism
Generation, access and use of Dai: Users use the Maker protocol to create smart contracts called "Maker Vault" and deposit them in assets to generate Dai. This process is not only the Dai entering the circulation field, but also users gaining liquidity. In addition, users can also buy Dai from an intermediary or exchange. At the same time, Dai can be sent to others to use it to purchase goods and services, and it can even be transferred to a savings account through the Maker protocol function called "Dai Savings Rate (DSR)". Every Dai in circulation is backed by excess assets-the value of the collateral is always higher than the value of Dai's debt-and all Dai transactions are publicly visible on the Ethereum blockchain.
MKR Holder Responsibilities
MKR holders can vote to do the following:
- Add a new collateral asset type with a unique set of Risk Parameters.
- Change the Risk Parameters of one or more existing collateral asset types, or add new Risk Parameters to one or more existing collateral asset types.
- Modifythe Dai Savings Rate.
- Choose the set of Oracle Feeds.
- Choose the set of Emergency Oracles.
- Trigger Emergency Shutdown.
- Upgrade the system.
MakerDAO Project Team
MakerDAO, was created in 2015 by Rune Christensen, an entrepreneur from Sealand, Denmark.
Christensen graduated from Copenhagen University with a degree in biochemistry and studied international business at the Copenhagen Business School. Prior to MakerDAO, he co-founded and managed the Try China international recruiting company.
DAO teams consist of individuals and service providers, who may be contracted through Maker Governance to provide specific services to MakerDAO. Members of DAO teams are independent market actors and are not employed by the Maker Foundation.
Examples of DAO team member roles are the Governance Facilitator, who supports the communication infrastructure and processes of governance, and Risk Team members, who support Maker Governance with financial risk research and draft proposals for onboarding new collateral and regulating existing collateral.
MakerDAO Project Highlight
1.Balancing the contradictions within the system.
If ETH depreciates rapidly, the value of Dai's collateral will drop rapidly, causing the system to collapse. So, Maker created the MKR token. Let the CDP mortgage rate be decided by the holders of MKR. As the administrator of the system, MRK holders will receive certain rewards. When the collateral in the system is insufficient to cover the value of Dai, MKR will create a new Dai to make up for the value. This provides strong incentives for MKR holders, so that they must create the coefficient of Dai in a standardized way. If the system fails, they will lose it instead of Dai holders. The MKR token can balance the contradictions in the system, stabilize the value of Dai and the US dollar, and enhance investor confidence.
2.Fail-safe Mechanism: Global Settlement (Emergency Shutdown)
In order to protect the interests of users, the Maker team created a global settlement system to resist unpredictable crises. When the global settlement system is triggered, the entire system will be frozen, and all Dai and CDP holders will be returned to the collateral. If a global settlement procedure is triggered, the user has 100 Dai, and 1 ether is worth $100, and the user can directly exchange their 100 Dai through a smart contract.
In the Maker system, it can be found that Dai is actually a loan in exchange for ETH. Users can continue to use Dai to buy ETH on the market, and then recycle it. Although the mortgage rate gradually reduces the number of Dai loaned out, it also allows users to use several times the leverage, and the financial attributes are very strong.
MakerDAO Community and Social Channel
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