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DAI stablecoin, financial freedom thanks to decentralized governance

Oct 13, 2021
4.92 (507 votes)

DAI stablecoin, financial freedom thanks to decentralized governance. Discover the benefits of a stable, manageable currency.

Stablecoin DAI

DAI stablecoin, a stable and decentralized currency that does not discriminate. Any individual or company can benefit from the advantages of digital currency.

The principle of a stablecoin which is a type of cryptocurrency is that it is linked to an asset like the US dollar and has a value that hardly changes.

The goal is to have a stable crypto-currency, as the name suggests, and therefore has very low volatility.

When it comes to decentralized finance news, it’s impossible not to hear about stablecoins, but do you really know what they are and why stablecoin DAI is quite interesting for cryptocurrency users.

What is MakerDAO?

MakerDAO is an Ethereum-based protocol that issues the Dai stablecoin and facilitates collateral-backed loans without an intermediary. Its widespread use and DeFi integration make MakerDAO one of the most operational protocols in the crypto ecosystem.

DAI stablecoin explained in a few words:

The Maker Protocol, also known as the Multi-Collateral Dai (MCD) system, allows users to generate Dai by leveraging collateral assets approved by Maker Governance. Maker Governance is the community-organized and managed process for managing the various aspects of the Maker Protocol.

Dai is a decentralized, unbiased, collateral-backed crypto-currency backed by the US dollar. Resistant to hyperinflation due to its low volatility, Dai offers economic freedom and opportunity to anyone, anywhere.

Blockchain technology offers an unprecedented opportunity to alleviate the public’s growing frustration with and distrust of dysfunctional centralized financial systems. By distributing data across a network of computers, the technology allows any group of individuals to embrace transparency rather than control from a central entity. The result is an unbiased, transparent and highly efficient permissionless system that can improve current global financial and monetary structures and better serve the public good.

Bitcoin was created for this purpose. But while Bitcoin succeeds as a crypto-currency on many levels, it is not ideal as a medium of exchange because its fixed supply and speculative nature leads to volatility, which prevents it from proliferating as mainstream money.

Dai stablecoin, on the other hand, succeeds where Bitcoin fails precisely because Dai is designed to minimize price volatility. A decentralized, unbiased, collateral-backed crypto-currency backed by the U.S. dollar, Dai’s value lies in its stability.

Dai is easy to generate, access and use, here is why?

Users generate Dai by depositing collateral assets into Maker Vaults in the Maker protocol. This is how Dai is put into circulation and users access liquidity. Others obtain Dai by purchasing it from brokers or exchanges, or simply by receiving it as payment.

Once generated, purchased or received, Dai can be used in the same way as any other crypto-currency: it can be sent to others, used as payment for goods and services, and even kept as savings through a Maker Protocol feature called the Dai Savings Rate (DSR).

Every Dai in circulation is directly backed by excess collateral, meaning the value of the collateral is greater than the value of the Dai debt, and all Dai transactions are publicly visible on the Ethereum blockchain.

The Dai Savings Rate (DSR) allows any Dai holder to earn savings automatically and natively by locking their Dai into the DSR contract in the Maker protocol. It can be accessed through the Oasis Save portal or through various gateways in the Maker protocol. Users are not required to deposit a minimum amount to earn the DSR, and they can withdraw all or part of their Dai from the DSR contract at any time.

A growing ecosystem

More than 400 apps and services have integrated with Dai, including wallets, DeFi platforms, games and more.

The main advantage of this stablecoin is that it is completely decentralized, and when you think about it, this is very important.

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