The concept of stable cryptocurrency is not new - Tether (USDT), USDC, Pax and many others have value based on the US dollar. Basically, a certain amount in dollars is stored in bank accounts, and the equivalent in tokens is introduced into the crypto ecosystem.

MakerDAO came up with a different concept - DAI is a stable cryptocurrency worth $ 1, but it is based on ETH and, more recently, BAT. Unlike other stable cryptocurrencies , whose value is directly supported by USD, DAI is supported by crypto collateral that can be viewed publicly on the Ethereum blockchain.

How we can make a profit using the MakerDAO ecosystem

Founded by Rune Christensen, the MakerDAO ecosystem is a decentralized lending system based on the stable cryptocurrency DAI. Specifically, users store Ethereum in smart loan agreements, and DAI is issued based on this guarantee.

The DAI price is maintained through a system of intelligent contracts that runs automatically. If the DAI price fluctuates too far from a dollar, Maker tokens (MKRs) are burned or created to stabilize the DAI price. MakerDAO algorithms automatically manage the DAI price, so no central authority is required to maintain its $ 1 value,

MakerDAO users can thus transfer and use DAI to obtain loans, margin trading or transfer it to their own Ethereum wallets.

DAI stable cryptocurrency is guaranteed with ETH, BAT and USDC

The current version of DAI allows the use of several types of crypto assets as collateral. Until November 2019, the MakerDAO ecosystem only allowed the use of ETH to create DAI. Since then, however, two other cryptocurrencies have been included - Basic Attention Token (BAT) and USD Coin (USDC). BAT is the token that underlies the ecosystem created by the Brave browser, and USDC is a stable dollar-based cryptocurrency.

Currently, the total value of crypto assets in the MakerDAO ecosystem is $ 1.13 billion.

How does DAI work?

A simplified DAI issuance process looked like this:

A user submits ETH (for example, the equivalent of $ 200)

The system issues 100 DAI worth $ 100 (2: 1 warranty ratio)

The user withdraws the DAI and uses it as he wishes

When the user wants to change the DAI into ETH, he has to buy it back, paying 100 DAI plus interest. The annual interest rate is variable, it can be checked on DeFiRate .

The user pays back DAI plus accrued interest. The value of interest goes directly to the holders of MKR tokens to maintain the system.

Recently, MakerDAO expanded its system, and DAI holders can lock cryptocurrencies in the Oasis app to earn interest. The DAI stable cryptocurrency is also listed on most exchanges

One of the main uses for DAI is as a stable or counterweight hedge against the volatility of crypto assets. The fact that it has a stable value means that it is also easy to use for investors and traders. In fact, DAI is one of the cryptocurrencies that can power the Coinbase card or the Monolith Visa debit card (available in the EU and the UK).