Kathleen Chu, Japan Lead and MakerDAO, will present MakerDAO and its associated ecosystem.
MakerDAO is the protocol behind the stablecoin DAI — a cryptocurrency that maintains a 1:1 soft peg to the USD. Think of 1 DAI as $1. What makes it unique is each DAI is backed by Ether instead of a 3rd party claiming to have the required collateral. Since Ether is volatile this poses some interesting challenges to maintain the peg.
The project was started in 2015 and did not conduct an ICO, instead choosing to privately sell MKR tokens to fund development over time. Maker’s DAI stable coin launched in December 2017 and has experienced significant traction since then.
Why do we need DAI? Dealing with crypto’s volatility is a problem. As many in the blockchain space know, DAI is not the first stable coin in the space. Predecessors include Tether, TrueUSD and a few others. However the risk of all of these projects is that the custodial party holding the real US dollars will refuse redemption of the stable coin for any regulatory reasons. This goes against the ethos of crypto being permissionless. Furthermore, we have to trust that the custodial solution actually has the correct amount of US dollars and not creating artificial inflation.
Who’s using it? DAI is arguably the most successful project built on Ethereum at this point in time. It currently holds 2% of all Ether inside its smart contracts and has issued over $82 MM in DAI (debt) in its system. t is also the biggest player in the space of so-called decentralized finance or defi, representing more than 70 percent of a fast-growing market. (see https://defipulse.com/)
Slightly adapted from the article on Hacker Noon: https://hackernoon.com/whats-makerdao-and-what-s-going-on-with-it-explained-with-pictures-f7ebf774e9c2
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