Crypto Academy Week 6 Homework Post for [@yohan2on] Stable Coins

amjadsharif (70)in SteemitCryptoAcademy • 4 years ago

Hello everyone, I read the lesson of my professor @yohan2on today. Now I am going to present. This is my homework post for week 6.

What Is Stable coin

A stable coin is a new type of cryptocurrency designed to stabilize prices and be supported by reserve assets. Stablecoins focus on efforts to provide the best of both worlds. The real time processing and protection or confidentiality of cryptocurrency payments, and the volatility and volatility value of fiat currencies.

Stable coins are cryptocurrencies that try to increase their market value through some external references.
Stable coins can be linked to currencies such as the U.S. dollar, or they can be linked to the price of commodities such as gold.
A stable currency achieves its price stability through mortgage or algorithmic mechanisms used to buy and sell reference assets or their derivatives.

What is DAI Stable Coin

Source
Among the most integrated digital assets in the blockchain ecosystem, DAI is considered an ideal tool for sending remittances, hedging volatility, and lending without permission.

CEO and founder Rune Christensen first introduced MakerDAO in 2015 and launched Maker Protocol (the infrastructure of DAI stable coin) in December 2017.

MakerDAO's DAI model is different from other leading stablecoins.

First: DAI has an unprecedented degree of decentralization. Although stable coins like Tether provide cryptocurrencies backed by a reserve of legal assets managed by a central organization, no one controls the issuance of DAI. Instead, users who wish to hold DAI will submit Ethereum-based assets to a smart contract, which will be used as collateral to maintain DAI's peg to the U.S. dollar.

Second: Unlike most stable coins that use a single legal currency or cryptocurrency as collateral, DAI uses three different cryptocurrencies as collateral: ETH, BAT and USDC. From the beginning, the manufacturer agreement only supported Ether as collateral. However, in November 2019, the technology has been updated to include BAT and USDC, thus creating today's multi-collateral DAI system. The increase in the amount of collateralized currency diversifies users' risks and improves the price stability of DAI.

Third: Holders of DAI tokens earn interest on their DAI. Those who hold MakerDao's native management token maker can set the DAI savings rate and act as a guarantor of DAI-this means that if the system crashes, their maker tokens can be liquidated. This structure encourages the guarantor to ensure the normal operation of the DAI system and its mortgage tokens.

One die is worth one.
The government and other central agencies cannot shut it down.
No one can control it.
As with any cryptocurrency, you can bypass all intermediaries and exchange directly.
You can trade freely like any other ERC-20 token.
It brings unreliable stability to the volatile crypto ecosystem.
Having an Ethereum wallet allows anyone in the world to send and receive it.

DAI Usage on MakerDAO

DAI is an ERC-20 token that can be purchased from centralized and decentralized exchanges (DEX). In addition, you can open the Maker Mortgage Vault from the Maker DAO Oasis Borrow dashboard and use Ethereum-based assets as collateral to generate and borrow DAI. The Maker Mortgage Vault (previously called the Mortgage Debt Position in the early iterations of the Maker contract) is a smart contract that holds the collateral until the borrowed DAI is returned. The value of the collateral you deposit must always exceed the value of the DAI issued by you. If the value of the collateral is lower than the value of the issued DAI tokens, the collateral will be liquidated. DAI is one of the most integrated digital assets in the blockchain ecosystem. The borrowed DAI can be used in Decentralized Finance (DeFi) applications or blockchain-based games.

Advantage of Stability for DAI Holders and Security Features

DAI is pegged (or linked) to the value of the U.S. dollar. The higher price stability provided by the DAI stable coin prompts investors to regard DAI as stable storage of long-term value and a viable choice for daily transaction purposes, thereby greatly expanding the utility of blockchain technology and the overall cryptocurrency system.

DAI Stablecoin Advantages and Use-Cases

No Account Minimum: Many people around the world lack the minimum amount of assets to be eligible to open a bank account, but there is no minimum balance requirement for using DAI.
Stable Value: DAI can provide citizens living in severely economically unstable regions with another stable currency and financial inclusive means.
Decentralized Freedom: Because DAI is a transparent and unlicensed system, it helps to ensure that users have more unrestricted access to their wealth. In contrast, it is well known that some governments restrict citizens’ ability to obtain legal tender by setting daily or monthly withdrawal limits on bank accounts.
Always On: Traditional financial institutions only operate during "business" hours. Therefore, transactions conducted through such institutions can be kept for several days and can only be completed after the banking institution has opened up and actually processed the transfer. However, with DAI and the Ethereum blockchain, transactions can be completed at any time of the year and within a few minutes of each day.
Highly secure: The Maker protocol was designed with security in mind, and it is well known that the MakerDAO system will conduct extensive audits and research to ensure the strong security of the platform. Through mathematical analysis, developers can formally verify all smart contracts and basic protocol mechanisms that constitute the internal structure of the system.
Income Generation: DAI Savings Rate (DSR) system, users use DAI tokens to earn income by locking and generating interest. Since DAI is built on the Ethereum blockchain, it uses the network's own consensus mechanism, so DAI itself does not have its own mortgage mechanism. However, the MakerDAO system enables DAI token owners to earn returns by depositing DAI into the MakerDAO smart contract. This special smart contract system can ensure the safety of the user's investment, and there is no minimum, which can be withdrawn at any time.

DAI is widely available on exchanges and can be paired with other cryptocurrencies.
For Example: BTC / DAI, ETH / DAI, etc.

Conclusion

In this class I learned a lot, the lecture of my professor @yohan2on is very easy. Thanks for the class of week6.