Maker is a decentralized finance platform that permits borrowers to take stablecoins on loan on a permissionless basis while they deposit collateral in cryptocurrencies. The stablecoin borrowers collect in exchange for the collateral is the DAI. DAI stablecoin was formed by Maker on the Ethereum network.
Maker was the first successful DeFi project. It made its mark a long time before other DeFi projects started coming up and it still retains the first position among others.
Being permissionless, stablecoin loan applicants who do not want to fill KYC forms are encouraged to join. ETH is one of the cryptocurrencies that are accepted as collateral for taking some stablecoins. The loans are all given in automated fashion by smart contracts.
Maker acknowledges its users so it made its native token, the MKR, to also be a governance token so that members can choose the features they would like to see. Apart from voting, MKR is the final solution to correct price discrepancies.
How Maker started
Maker was one of the first Ethereum projects that people began to hear about in 2015. Its whitepaper and mainnet came together three years ago. After the launch of the mainnet, MKR tokens amounting to $12 million were sold.
Usually, ICOs are open for anyone to participate but Maker’s ICO was strictly based on invitation. Those who were invited contacted Maker earlier to indicate their interest. This low-key method didn’t make them to sell much and it took a second ICO for it to sell another $15 million worth of Maker tokens (to Andreessen Horowitz) in September 2018.
After the ICO, Maker began issuing DAI on loan for crypto. Up to $85 million worth of DAI has been loaned for collaterals worth 394% more than the loans given. Messari has revealed that MKR is the 23rd most important digital asset while its liquid market cap is approximately $500 million.
Who controls Maker?
Maker was built to be controlled by a group of people known as its community although it still has a core team. The implication is that the number of people that make up the Maker is one of DeFi’s best.
Some of those at the management level include Founder Christensen, and President Becker who manages financial risks. Richard Brown is also another man recognized in the MakerDAO community. The team also comprises business developers and leaders. Apart from Richard, there are six other community managers. There is also a team of leaders and another team of business developers.
Understanding MakerDao’s Methods
DeFi freshers already conversant with Coinbase rejoice in the fact that they can earn DAI through Coinbase after completing a few tasks.
Making DAI is not rocket science. To benefit from this opportunity, simply get for yourself some Ether, and Metamask.
After users are joined to Oasis Borrow, they are prompted to determine the quantity of Ether they are willing to stake or deposit for a long time. The amount you choose determines how much DAI you will get in return but it is advised not to choose so much so that your collateral will be enough to settle any debt that may occur if things go unexpected with your deposit.
The procedures for creating an Ethereum-based Vault take only few minutes. If the vault is approved, you will instantly get some DAIs directly from Maker with the help of a smart contract. Some things you must know while filling the form include:
1) Liquidation Price: At this price, it will become indisputable to sell the assets you have borrowed.
2) Liquidation Penalty: Liquidation comes with a fee called the liquidation penalty. This fee can be collected from the collateral issued but in general, it depends on what the community has decided.
3) Collateralization Ratio: This shows how your account is ready for unforeseen price fluctuations. It is also a measure of leverage and is expected to be way higher than the liquidation price.
4) Minimum Ratio: Your assets will be immediately sold if your collateralization ration goes is less than this.
5) Stability Fee: This is what every loan beneficiary pays to close the request. Accepted coins include DAI and MKR.
As a precautionary measure against crashing, MakerDAO encourages users to have nothing less than 150% overcollateralization ratio. In fact, more than this is expected from those that have acquired plenty of DAIs. If your loan is still open, you are free to add more to your collateral or take away from it if the price of ETH is doing so well.
Multi Collateral Dai
Maker started its Multi Collateral DAI (MCD) ten months ago. This guarantees the use of Ether and other assets as collaterals when creating a Vault.
Sometime ago, MakerDAO decided to add some new assets as collaterals for getting the DAI. Votes were cast among DigixDAO (DGD), Augur (REP), OmiseGo (OMG), Ether (ETH), Basic Attention Token (BAT), Golem (GNT), and 0x (ZRX). After voting, ETH and BAT were chosen because they secured 100% and 99.82% of votes respectively. Later on, USDC was added and then the most recent one, wBTC. Users can now obtain Wbtc to get DAI after successfully creating a Maker Vault. This is good news for Bitcoin holders who can now get DAI after converting their coins to wBTC. More information regarding this can be found on MakerDAO blog.
Another good thing that came with MCD is the Dai Savings Rate (DSR). This simply means people that save their Dai or use it for the DSR smart contract will have more of it after a specified time.
Maker’s dashboard designed to make navigation easy among users. Thanks to Oasis Save which made it to resemble the bank-type savings account. Extra DAI earned from savings will be seen clearly on the dashboard and any amount can be removed or accumulated as the user decides.
Maker’s performance since its creation has been wonderful and it has been a reason why more people now participate. DAI is a hot choice now for various companies that have discovered its importance in using some trading strategies.
Presently, lending DAI can be achieved through Compound. It serves the purpose of purchasing Non Fungible Tokens through Axie Infinity. Popular exchanges have DAI paired with other assets for crypto traders.
To follow what is happening, you can visit Youtube. To join others in discussing the project, use the Discord channel or you can see Maker’s blog. Other sites related to Maker include MakerScan and MakerBurn
Hopefully, MakerDAO will continue doing well and even better so that all the expectations concerning it will be fulfilled.