The Maker platform presents to us, Dai. At first glance, it seems to be trying to offer what Tether (USDT) does, which is:
“Dai is a cryptocurrency that is price stabilized against the value of the U.S. Dollar. Dai is created by the Dai Stablecoin System, a decentralized platform that runs on the Ethereum blockchain.” – Official Maker Website
Moreover, this is what they the creators of Maker platform claim:
Admittedly, cryptocurrencies – particularly Bitcoin (BTC) – offer a great solution for decentralized exchange of value. Just today, one of my clients was having difficulty transferring (fiat) money to my bank account out here in Pakistan. Presumably, it’s because the company deals with cryptocurrencies. Notably, the State Bank of Pakistan ordered in April to not serve customers who’re transacting in digital currencies. There might also be other restrictions that the local banking system might be imposing, which are usually very unfair. Lucky now we have Bitcoin (BTC) to conduct cross-border transactions without the hassle of putting up with the nonsense of a third-party.
However, just to be clear, what the creators of the Maker platform aim to offer is money that works best for you based on your circumstances. Practically speaking, I would not be able to buy anything with BTC out here in Pakistan and I would assume it’s the same case in many of the other third-world countries. Therefore, I am forced to convert my crypto to fiat cash in order to pay for things.
So, how exactly does the Maker platform work to help people get the best value from monetary exchange? Here’s how:
Decentralized Autonomous Organizations (DAOs) or Distributed Autonomous Companies (DACs) have been a big buzzword for a number of years now. These self-sustaining, usually AI enabled, DAO / DACs, here developed by the Maker platform appears to be using some sort of algorithm to lower the extremely high levels of volatility associated with most cryptocurrencies.
Moreover, the MakerDao website says:
“The next generation of financial applications become possible with a stable digital currency.”
Maker – Super Technical Whitepaper
So, here Dai seems to be a “collateral-backed” digital currency designed to remain stable – just like the USD. As noted above in their whitepaper, the development of stable crypto assets is a step forward in beginning to take advantage of all what blockchain could offer us. Although many crypto experts, such as Andreas Antonopoulos, Bitcoin developer Jimmy Song, and even Litecoin founder’s (Charlie Lee) brother, Bobby Lee claim that blockchain is either “bullshit” or does not have “any real world use cases.”
While this may be the case to some extent at present, due to the primitive stage of development of blockchains, the whole idea/concept and use of blockchains should not be dismissed so easily. So, let’s give platforms like Maker the chance at least to prove themselves.
The way Maker stabilizes their digital asset, Dai, is by issuing a smart contract on Ethereum that:
“backs and stabilizes the value of Dai through a dynamic system of Collateralized Debt Positions (CDPs), autonomous feedback mechanisms, and appropriately incentivized external actors.”
Of course, it would require more thorough investigation into just who the “external actors” are or would be. Furthermore, CDPs through Maker would also need to further investigation. The interested reader can visit their website (makerdao.com) for details as this article is not meant to be an exhaustive analysis or breakdown of what this platform is about.
DISCLAIMER: This article is not meant to influence any investment related decision. It’s purely for informational purposes and to help spread awareness about cryptocurrencies and blockchain technology.
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