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87. Maker Dao (MKR) (Published: 4th Jan, 2018)

Dai is a cryptocurrency that automatically reacts to emergent market conditions in order to stabilise its value against the major world currencies. Dai is created by the Dai Stablecoin System, a decentralized platform that runs on the Ethereum blockchain.

Since popular digital assets such as Bitcoin (BTC) and Ether (ETH) are too volatile to be used as everyday currency, any application which requires a low threshold of volatility to be viable on a blockchain, consumer loans for example, simply cannot be denominated in a currency which fluctuates 10–20% in a day. The Dai Stablecoin is a collateral-backed cryptocurrency whose value is stable relative to the US Dollar, which is believed to be essential torealise the full potential of blockchain technology.

Dai is the first product of the Maker organisation. It has been 3 years sinceMakerDAO was first formed. The first MakerDAO governance meeting was held successfully on 17th January 2016. For the Dai project, they have already done the price feeds, which is the minimum viable product for the price oracle ecosystem. Dai was first traded on 27th December 2017.

For Maker, it is a smart contract platform on Ethereum that backs and stabilises the value of Dai through a dynamic system of Collateralised Debt Positions (CDPs) (A CDP is a type of software that runs on the blockchain, in this case the ethereum blockchain, and lives within the Maker ecosystem), autonomous feedback mechanisms, and appropriately incentivised external actors. Maker enables anyone to leverage their Ethereum assets to generate Dai on the Maker Platform. Once generated, Dai can be used in the same manner as any other cryptocurrency: it can be freely sent to others, used as payments for goods and services, or held as long term savings. Importantly, the generation of Dai also creates the components needed for a robust decentralized margin trading platform.

The main feature of Dai is that anyone, anywhere has the freedom to choose a money they can place their confidence in. A money that will always maintain its purchasing power. The essential stability property is continuously maintained through an autonomous system of smart contracts specifically designed to respond to market dynamics. Each Dai is backed by some valuable asset held in a decentralized manner in the secure Maker smart contract platform. To create Dai, users can send Ether to a Collateralised Debt Position (CDP) on the Maker platform.

Future Development
There will be a lot of actions in the future. In the implementation stage, the Vow settler is the last major component of the Dai Stablecoin System to be implemented. It is responsible for liquidating risky CDP’s and sending their collateral to the token auction. Meanwhile, they are going to write the purple paper, which defines the data structures and states transition functions that make up the Dai Stablecoin System. There are many events in the concept stage as well, like multi-collateral cage, which allows any Dai Stablecoin System to be gracefully shut down, dashboard, proof production and root authority etc.

Maker Dai stablecoin is the first working consumer-grade stablecoin because it stands out from both its predecessors and competitors. It is going to be the first application, in a series of many, that brings blockchain technology to the masses. It is revolutionary to the crypto market, and it has a high growth potential. However currently the project is in an early stage and doesn’t trade on any big exchanges. We suggest users to keep an eye on the project.

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