What is DAI (Maker DAO - MKR) and Why do we Need It? | Interaxis.io

Описание: As we continue to discuss Stablecoins, we move to the most significant and widely used of the algorithmic tokens - DAI.

DAI was started by the Maker Foundation, and is governed by the Maker DAO.

Maker DAO is a protocol that uses a series of incentives to drive certain behaviors in the investors. The idea is that holders of certain Cryptocurrencies will want to continue to hold, but may need a Stablecoin to transact.

They would lock up their Crypto as collateral in vaults, and borrow DAI. They would then be forced to pay back the DAI loan, with interest, which is paid in the MKR token.

The interest rate is continuously moving in relation to the supply and demand of DAI, and does so in an effort to get users to either lock more, or take some out of their vaults. As the users repay their debt, the DAI is burned. As they lock collateral in the vaults, DAI is minted. The continuously changing supply and demand aims to keep the value at roughly one US Dollar.

Just in case there are huge drops in the value of the Crypto that is providing the collateral, there is a minimum of 150% collateralization ratio...although most vault holders keep at least 200% to keep themselves safe.

DAI is the most successful purely algorithmic Stablecoin so far, and formed the first basis for DeFi. It has had some tough times with large Crypto selloffs, and now has a more involved governance community.

It is one of the most important Cryptocurrencies to be developed, as it has really allowed so many to start using Decentralized Finance.

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