INTRODUCTION
I’ve always heard about stable coins but I haven’t ever traded with one. The idea of trying to control the volatility of cryptos with the concept of stable coins is really smart if you ask me. I’ve made some research on stable coins and I’ve learned that there are a dozen of them (more than I expected). I’ve learned the basics of the factors that make these coins stable.
This post is on my research on DAI in an attempt to Complete the task given by @yohan2on that goes:
Write about any one of the following stable coins;
Tether(USDT)
Steem backed dollar(SBD)
DAI
DAI
A brief history on the Dai coin
Dai was launched on the 18th of December, 2018 on the Ethereum network and is backed by Ether(Eth). It was launched by MakerDao which was formed by Rune Christenson.
Overview
The Dai coin is a special one compared to other stable coins. Dai is not backed by commodities like the dollar or gold rather it is backed by digital assets. Most stable coins are centralized and therefore controlled by a central authority but the ether-backed nature of Dai makes it completely decentralized through the ethereum system of smart contracts. The supply of Dai is therefore not controlled by a central body but by users worldwide offering transparency to the system.
“With a decentralized stablecoin, you can see everything on the blockchain,” said Rune Christensen, founder of the protocol that Dai runs on, MakerDAO. “Anyone can go and do a real-time audit.” " reuters.com
Like all stable coins, the aim of the Dai is to address the issue of volatility in cryptocurrencies with its price pegged at $1 per coin. Although ether, a volatile cryptocurrency, is the only collateral for dai, the coin (dai) still maintains its stability somehow.
MakerDAO has made this possible with the development of The Collateral Debt Position (CDP). Dai is generated and issued to a person when they deposit ether into a CDP as collateral. The equivalent dollar value of the ether is issued to the person as dai. The ether is locked and can only be accessed when the person pays back the dai with a stability fee. This stability fee regulates the price of dai keeping it pegged to the dollar. When the price of dai goes above $1, the stability fee is reduced so that the demand increases and supply goes up. This reduces the price of dai.
In a case when the dai costs less than $1, the stability fee is increased causing demand and supply to fall boosting the price of dai.
Dai statistics as of writing
Price | $1.00 |
Rank | #38 |
Market cap | $2,874,979,137.68 |
Trading volume | $207,999,116.28 |
" Stats from coinmarketcap.com
Associated DApps
- Oasis.app
- Governance
- Migrate
- Oasis Borrow
Some trading platforms to get DAI
- Coinbase
- Wyre
- Bitcointrade
Conclusion
DAI is a special type of innovation because it combines that stable feature with the decentralized nature of cryptocurrencies. It’s transparency makes it a top stable coin. It might even be better than USDT... who knows...
Special thanks to @yohan2on
Hi @awesononso
Thanks for attending the 6th -Crypto course and for your effort in doing the given homework task.
Feedback
This is good work. Well done with your research on Dai Stable coin.
Homework task
7
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