Liquid customers can now trade Dai, an ERC-20 decentralized stablecoin created by Maker.
At the surface, Dai is an collateral-backed decentralized stablecoin pegged to the US dollar.
But Dai is no ordinary stablecoin. In fact, Dai has a number of unique attributes that differentiates it from other similar assets.
Let's take a look.The benefits Decentralized
Since the stablecoin is decentralized, by the very definition there is no central entity controlling the underlying mechanisms of Dai.
Additionally, as Dai exists by utilizing the capability of the decentralized Ethereum network, value can be transferred via Dai without any middleman, which isn’t possible in traditional finance.
The entire network is controlled by preset rules and the relationship between Dai, Ethereum, and the Maker token (MKR).
Economic incentives play a role too - correct actions are financially rewarded, which ensures the network is maintained.Unrestricted
Dai can be sent anywhere in the world with minimal fees. You just have to pay the gas on the Ethereum network. There are also no restrictions. You can send your money whenever you want, to wherever you want.
The records of Dai are immutable and stored on a blockchain. What’s more, Dai utilizes smart contracts to prevent bad actors from exploiting the system.How it works
Dai is based on the Ethereum network. As it stands, Ethereum (ETH) is used as collateral for Dai. Maker is working on Multi-Collateral Dai that will significantly upgrade the Dai system by increasing collateral options.How Dai remains stable
The price of Dai remains stable through the creation and destruction of Dai supply in accord with supply and demand levels. However, the supply isn’t managed in a seigniorage share system like other stablecoins.
Dai manages supply and demand through economic incentives. When the price is above 1 USD, anyone can create Dai and sell it for...