MakerDAO - Lending platform on the Ethereum blockchain -

    Sep 13, 2022

    The Defi wave is growing rapidly and demonstrating the market's overwhelming appeal and MakerDAO is one of the projects pioneering the current DeFi trend. More than 200 DeFi projects, or 80% of the total MarketCap of DeFi projects, are using their stablecoin DAI. Learn more about MarketDAO and DAI with in this article.

    What is MakerDAO?


    MakerDAO can be understood as a smart contract platform, built on the Ethereum Blockchain network.

    One of the most popular lending protocols at the time is MakerDAO. The goal of MakerDAO is to develop a system that will keep the value of DAI Stablecoins stable. in which each DAI will be worth one USD. Collateralized Debt Positions will be used as the execution method. In example, Maker Platform enables users to exchange DAI Stablecoins for their Ethereum assets using smart contracts. The DAI Stablecoin and Maker are two crucial and significant components of the project.

    What is DAI stablecoin?

    what-is-dai.jpg DAI Stablecoin is a type of Stablecoin mortgaged by Cryptocurrency and kept stable, corresponding to 01 DAI = 01 USD. DAI is generated from the Makers Dai Stablecoin (MKR) system. In order to react to changes in the market, the DAI cryptocurrency frequently uses margin trading. On the other hand, it helps in maintaining DAI's value in relation to other global currencies.

    What problem does MakerDAO solve?

    Limit price volatility

    The issue of price variations in one cryptocurrency is too big. This demands for a currency whose value remains stable in the face of market factors. As a result, both individuals and companies can benefit from cryptocurrency for a variety of needs and goals, not just investing in or speculating on a single token or currency while waiting for the price to rise

    Limits to the flow of money and finance between people and organizations include high transaction costs, limiting rights, or being subject to intermediaries' control.

    The Best Decentralized Stablecoin is Being Created

    The most well-known stablecoin in existence today, Tether (USDT), is understood by all. However, the USDT still has some disadvantages:

    • The company owner who intends to defraud, elude capture, or both.
    • The government discourages or negatively regulates the enterprise.
    • Hacked platform.

    These dangers put the value and liquidity of centralized stablecoins at risk at any time. DAI was developed to work toward the goal of a secure, democratically managed, and risk-free decentralized stablecoin.

    On the other side, the MakerDAO platform also enables users to get loans without going through KYC or relying on a middleman. With incredibly low interest rates and repayment terms chosen by the borrower, everything is secure since smart contracts control everything.

    How do MakerDAO and DAI work?


    Anyone who has an eligible asset can mortgage it and get DAI Stablecoin in return relying on Maker Governance and smart contracts. The adherence to the outlined principles will be proactive.

    The smart contracts we're referring to here are called Collateralized Debt Position (CDP) Smart Contracts (temporarily known as Smart Contracts for Collateralized Debts).

    This is how it would operate: CDPs would retain users' collateral before giving them their DAI back. The borrower returns the collateral in exchange for paying off the amount plus interest.

    Here are 4 steps to get you started if you want to try borrowing money on MakerDAO:

    Step 1: Create a CDP and deposit collateral.

    You need to submit 1 transaction to start creating a CDP. Next, deposit collateral to receive DAI. After deposit, CDP is considered as collateral.

    Step 2: Get back DAI from collateral.

    In this step, you continue to send 1 more transaction to request to receive the amount of DAI corresponding to the value of the collateral. After that, the CDP will be converted into a debt and locked during the loan process.

    Step 3: Pay back the debt and fees.

    When you want to end the loan and get the collateral back, you have to pay back the exact amount of DAI borrowed plus a stabilization fee. This fee depends on the loan period and can be paid in MRK token or DAI token.

    Step 4: Withdraw to CDP and get back the original collateral.

    After completing step 3, the CDP is returned and now only you have ownership of the CDP. Here, you can withdraw all or part of the collateral at any time.

    What are MakerDAO’s tokens?


    DAI stablecoin

    DAI is a Stablecoin created with a target value of 01 DAI = 01 USD. DAI is also an ERC-20 token.

    MKR token

    MKR is an ERC-20 Token in MakerDAO's ecosystem. It is used to pay the Stability Fee and plays an important role in the administration of this system.

    In the MakerDAO ecosystem, MKR is both a Utility Token and a Governance Token.

    PETH token

    PETH or Pooled Ether is the corresponding Token when the amount of ETH is deposited by the user inside the MakerDAO system.

    PETH can only be used with the corresponding value, like the point inside the MakerDAO System used to switch between DAI and ETH collateral. In addition, PETH cannot be moved out or traded on other exchanges.

    Information about tokens of the MakerDAO ecosystem?

    MKR Token

    Ticker: MKR

    Blockchain: Ethereum

    Smart contract: 0x9f8f72aa9304c8b593d555f12ef6589cc3a579a2

    Decimal: 18

    Token Standard: ERC-20

    Token type: Utility Token

    Circulating Supply: 1,000,000 MKR

    PETH Token

    Ticker: PETH

    Blockchain: Ethereum

    Smart contract: 0xf53ad2c6851052a81b42133467480961b2321c09

    Decimal: 18

    Token Standard: ERC-20

    Token type: Utility Token

    Circulating Supply: 1,576,144.96 PETH

    DAI Token

    Ticker: DAI

    Blockchain: Ethereum

    Smart contract: 0x89d24a6b4ccb1b6faa2625fe562bdd9a23260359

    Decimal: 18

    Token Standard: ERC-20

    Token type: Stable Token

    Circulating Supply: 84,233,257.83 DAI


    Above is the overview information about MakerDAO and DAI that has compiled. Hopefully through the article, you have had a specific look at the project that is leading this DeFi trend. Subscribe to our channels to stay up to date with the latest news.

    What is MakerDAO?- FAQs

    What is the MakerDAO interest rate?

    Each loan in DAI has an interest rate of 1% which, when repaid, triggers the purchase and destruction of an equivalent amount of MKR, a second token in the MakerDAO system, whose value fluctuates according to supply and demand.

    Does DAI pay daily?

    Coinbase distributes Dai Rewards every day (as long as you remain eligible).

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