Maker and DAI: DeFi Royalty or How MKR and DAI allow you to accomplish everything within DeFi.
Categories: Crypto News UK
What is Maker?
Maker is one of the first projects to present what would later become the decentralized finance (DeFi) ecosystem. It allows users to lend and borrow crypto without needing to do background checks or KYC. It consists of the Maker DAO and the Maker Protocol. The DAO is a Decentralized Autonomous Organization that was formed in 2015, while the Protocol is a smart contract.
The Maker ecosystem has two tokens, MKR and DAI. MKR gives voting power in the DAO, while DAI is a dollar-pegged stablecoin. The stablecoin allows you to transact within decentralized finance to a stable currency so when you borrow or lend your investment/collateral do not fluctuate wildly in price.
Why does Maker have value?
Maker is very useful as a gateway to the rest of the DeFi ecosystem. Since DAI is supported by different chains, like BSC, Fantom, or Avalanche, besides Ethereum, it can be used as collateral for loans on other protocols. Its price stability also makes it valuable as a payment method or in staking platforms.
What are the benefits of Maker?
- It is a decentralized stablecoin unlike USDT or USDC, which are governed by centralized entities.
- Holding MKR gives voting power in protocol decision.
- DAI can be used to participate in other DeFi protocols outside of Ethereum.
What are the disadvantages of Maker?
- Since it is mostly backed by other volatile cryptocurrencies, price swings can impact its stability.
- Lend/Borrow protocols could become targets for regulators in the future.
Maker and DAI are both connected with the Maker DAO project, which is a decentralized independent association (DAO) based on the Ethereum blockchain. Maker DAO is centered around making and overseeing the Maker Protocol, a decentralized framework that empowers the production of the stablecoin called DAI.
Maker (MKR): Maker is the administration badge of the MakerDAO project. MKR holders have casting a ballot rights and take part in the dynamic cycle in regards to changes and moves up to the Producer Convention. The essential capability of MKR is to keep up with the solidness of the DAI stablecoin.
DAI: DAI is a decentralized, security supported stablecoin made by the Producer Convention. It is intended to keep a worth of roughly 1 USD, making it helpful for strength in the decentralized money (DeFi) environment. DAI accomplishes its soundness through an arrangement of overcollateralization, where clients secure resources, fundamentally Ethereum (ETH), as insurance to produce DAI.
The Maker Protocol uses brilliant agreements on the Ethereum blockchain to deal with the creation, steadiness, and administration of DAI. At the point when clients secure their insurance, they can produce DAI tokens. In the event that the worth of the security falls under a predefined edge, the guarantee can be sold, and the DAI produced by that insurance is scorched to keep up with the soundness of the general framework.
Generally speaking, MakerDAO and its related tokens, Creator (MKR) and DAI, assume a huge part in the realm of decentralized finance, giving a steady and decentralized method for executing and saving worth inside the Ethereum environment.