MakerDAO is an ambitious project intended at a decentralized future for cryptocurrencies. The development took three years to launch on the Ethereum mainnet.
Maker is a two-token system that comprises both the MKR and DAI ERC-20 tokens. Both use ETH as a trading pair. It utilizes the MKR token and CDP smart contracts to maintain the DAI token at $1. It’s only soft-pegged to the US dollar that can be transferred to another currency should the US economy fall.
Maker is a decentralized platform concentrated on decentralized exchanges. Many top decentralized exchanges back it with voting powers on the Maker platform are possessed by MKR holders, who are the buyers of ultimate resort for DAI stablecoin and are thus incentivized to keep the platform running.What is Maker MKR and Maker DAI?
One of the biggest challenges to crypto’s mainstream acceptance as currency is the volatile pricing. Bitcoin as an example ordered at a price from $6,000 to $17,000 in 2018 alone. Nobody wants to pay 10,000 apparently worthless crypto tokens on a couple of donuts one day, only to observe the price jump to a price of over $100 million the next. The Maker DAI is a stablecoin intended to approach this volatility.
Tether (USDT) is seemingly the most well-known stablecoin, but it’s at the center of a lot of controversies. Critics and regulators question it’s supported by fiat currency, as its originators claim, although a recent report provided proof that dollars upheld the coin.
Either way, Tether lacks clarity, has a strong connection to the Bitfinex exchange, and was allegedly utilized to manipulate the price of Bitcoin and the crypto industry in 2017.
MakerDAO was founded by CEO Rune Christensen, uses a different strategy to stabilize DAI utilizing its proprietary MKR token. It’s an exciting approach that strictly follows fractional-reserve banking, in which a bank is only expected to hold a fraction of its deposit accounts.