The Maker Protocol allows users to leverage their assets as collateral that are approved by the Maker governance in order to get rewarded with DAI.
Maker Protocol comprises:
The Multi-Collateral Dai (MCD) system expands the set of assets that can be used as collateral beyond ETH.
On Nov. 15, 2019, an announcement was made to migrate assets from SAI to DAI with a complete shut down of SAI. Read more!
In the protocol, users lock collateral into smart contracts that generate Dai in proportion to the value of their collateral. The smart contract can be "closed" at any time by paying back the generated Dai plus a stability fee.
If any user's collateral falls below the required minimum level (called the liquidation ratio), then their collateral will be auctioned off to restore it to its proper value. In this way, all users are incentivized to maintain their collateral above the required level.
Dai is a decentralized stablecoin and is soft-pegged to the USD. As a user, you can hold Dai in your cryptocurrency wallet by depositing collateral assets into Maker Vaults. MakerDAO’s token Dai has a steady value of 1 USD.
Recently, MakerDAO moved to fully decentralization, mitigating the need for a middle man. MakerDAO combines loans with a stable currency, allowing borrowers to predict the amount they’ll have to pay back.
With over 400 applications and services allowing Dai on their platforms, MakerDAO has a huge and thriving ecosystem. You’d be surprised to know that MakerDAO remains the longest-running Ethereum blockchain-based project.
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