Crypto Academy Week 6 - Homework Post for professor @yohan2on about /Stable coins/ answered by @cryptocheta
Hi Steemians!!! It is another great week of lecture, are we all learning? because like I always say" we learn every day" it is true from what I have seen in this week 6 Crypto Academy. As usual, I enjoyed the lecture of professor @yohan2on about " Stable coins Great! work and now is my time to do my homework, which is "Write about any one of the following stable coins"
The coin I want to talk about is DAI
What is DAI?
DAI is an ERC20 token on the Ethereum blockchain that has a constant value of one US dollar. It is likewise the key to MakerDAO lending system. When a loan is taken out on MakerDAO, DAI is formed. It is the currency users borrow and payback.
Once DAI is formed, it functions easily as a stable Ethereum token. It can be used to pay for things and is simply transferred between Ethereum wallets.
Who Invented DAI?
DAI is a product of MakerDAO, which was founded by the current CEO Rune Christensen.
What is so special about it?
The price of DAI is kept in check by a system of smart contracts automatically executing themselves. If the price of DAI wavers too far from one dollar, Maker (MKR) tokens are burned or created to maintain the price of DAI.
MakerDAO’s algorithms automatically control the price of DAI so no one person demands to be trusted to keep the currency constant. If the system works as expected and one DAI equals one US dollar, MKR holders benefit because the entire supply of MKR decreases–making MKR more rare and valuable.
Up till now, DAI has remained stable for over three years with only lesser fluctuations from its one dollar price peg.
What else is different?
Considering DAI is simply a token on Ethereum, anybody can use or build with DAI without permission. As an ERC20 token, DAI operates as a building block that can be incorporated into any decentralized application (dapp) requiring a stable asset or payment system.
Developers can also wrap DAI in various smart contracts and modify it for different uses. For example, xDAI takes DAI and puts it on a superfast and low-cost sidechain to make transfers and payments more comfortable and more efficient. Chai and rDAI take normal DAI, places it in an interest generating pool, and lets users control what happens to the interest as it accumulates.
How is DAI produced?
DAI is generated whenever someone takes out a loan on MakerDAO. DAI is terminated when loans are paid back.
How do you get hold of DAI tokens?
The direct way to get DAI is by taking out a loan on MakerDAO’s Oasis platform. You can likewise trade DAI on that same platform or use a centralized exchange such as Coinbase.
What can you do with DAI?
One of the principal uses for DAI is as a stable hedge or counterweight against the volatility of more popular cryptocurrency-assets such as Bitcoin or Ethereum. The stable value of DAI indicates it is good for investors or traders who believe the market is about to go down.
Because DAI is stable, it is also one of the most ideal cryptocurrency assets to spend. The Coinbase Card enables users to spend DAI and other cryptocurrency assets by converting the cryptocurrency into fiat on a Visa card. Are you in UK or Europe?, you can likewise spend DAI using the Monolith Visa debit card.
DeFi and DAI
The 2020 boom in decentralized finance (DeFi) has seen DAI surface as one of the most popular assets in the DeFi ecosystem. Several services have emerged offering to lend on DAI deposits.
Coinbase customers from the Netherlands, US, UK, Spain, France, and Australia can earn 2% a year on their DAI deposits.
A dapp dubbed dPiggy not only enables users to earn interest but also have their returns automatically used to purchase a variety of cryptocurrency assets at the end of every month.
Bitcoin can now likewise be used to generate DAI.
Stablecoins in the crosshairs
A market crash in March 2020 threatened DAI’s stability, and developers started a controversial feature to allow it to maintain its peg supported by another stablecoin, USDC.
In July 2020, an upgrade to one of the main DeFi lending protocols repeatedly caused DAI to come off its peg, and the community voted to increase the system’s debt ceiling. The next month, it suggested prioritizing BUSD, GUSD, and eight other tokens for addition as collateral, which would enable them to be used to generate DAI, and create more liquidity.
The geopolitical outburst is making stablecoins more popular than ever; when Argentina imposed a new 35% tax on all purchases made in US dollars, DAI trading volume spiked on local exchanges on the news.
The Future
MakerDAO is working hard to brand DAI as the “world’s first unbiased currency” and it is beginning with the logo, which it wants to be as ubiquitous and recognizable as symbols for the dollar ($), euro (€), and pound (£).
In the journey to become the first trustless mainstream currency, DAI will have to be approved and used by millions of people–a task needing not only branding but including marketing and education. Though not a simple task, no other stablecoin is better placed to make it happen.
Conclusion
I have really enjoyed this homework and hope that the point is clear.
Written by @cryptocheta
Thanks to you professor @yohan2on
cc: @steemcurator01
cc: @steemcurator02
cc: @steemitblog
Hi @cryptocheta.
Thanks for attending the 6th -Crypto course and for your effort in doing the given homework task.
Feedback
This is very good work. Well done with your research on DAI.
DAI is indeed a popular token in the DeFi ecosystem. It's the first coin you are exposed to when starting out on DeFi.
Homework task
8
Thanks professor @yohan2on, your lecture also help me see somethings I really didn't look at before, and writing about Dai increased my knowledge too, all thanks to you and @steemitblog for the homework.