Steemit Crypto Academy | Stable Coins | Homework task 6 for @yohan2on

Hello friends !!

Today I'm going to make my Steemit Crypto Academy Homework task by professor @yohan2on Lesson 6 that talking about Stable Coins. Very interesting lessons. Actually I have very little knowledge about this, but I will try to discuss it to improve my writing skills.

Homework task 6 for this week is talking about Stable Coins. On this occasion I will try to discuss about stable coins one of the three list namely DAI.

Stable Coins

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Stable coins are digital assets with stable prices. The purpose of creating stable coins is to reduce price volatility, so that many users use this as a solution. This digital coin is based on assets in the form of USD, precious metals, and many other assets on the market. The use of stable coins was created in a simple, stable, scalable, and safe way for any transactions.

One of the digital coins that has become a stable coin, namely DAI. This stable coin is supported by digital assets. This coin is based on the USD at a 1:1 ratio with the underlying guarantee being a digital asset. Stable coin Maker DAO (DAI) carries out the process of issuing coins through various protocols based on blockchain. Users can lock up a number of digital assets as collateral for borrowing DAI coins whose prices are based on USD.

DAI

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DAI is a coin that is determined to have a stable price against the USD. DAI is created and generated into a smart contract code with a guarantee system. You could say, the principle of DAI as a stable coin is that you can get DAI coins by lending the assets you have in the form of ETH. With the support of existing guarantees, this will enable DAI which is known as a stable coin to become a solution.

When you want to borrow DAI and use ETH as your guarantee, the DAI value you will get is equivalent to the ETH value. The ETH used as collateral will be entered into the CDP (Collateralized Debt Position). All processes that occur are already using a smart contract system that will be mutually beneficial.

You can use DAI according to your needs. DAI can be used for various things, you can make transactions or it can also be saved to get more profit in the form of DAI storage interest. Furthermore, you can redeem the ETH guarantee by paying the DAI that you borrowed earlier. The circulation of DAI occurs in a very good way. A new DAI will be produced when there is a loan and will be removed from circulation when the loan has been repaid.

DAI Will Remain Stable

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To keep the value of DAI stable, of course, very important things are needed, such as a strategy that is able to run successfully. The creators and developers of Maker DAO search and find a combination of several strategies. The main strategy is the presence of a Maker (MKR) and the implementation of the Collateralized Debt Position (CDP).

• Maker (MKR) is a token created by MakerDAO and MakerProtocol. The purpose of these tokens is to stabilize price fluctuations. Maker (MKR) has the ability to vote on the system used to create stable DAI coins. Maker (MKR) functions to minimize the level of volatility or changes in the value of DAI against the USD value.
  MKR shareholders have power over the stability fee of DAI. Stability fee is a special interest that comes because of a completed lending and borrowing transaction. Maker (MKR) is used to pay a stability fee. After the fee has been paid, the MKR will be burned. MKR shareholders have the right to vote in terms of decision making such as price, risk level, price sensitivity level.

• Generally, getting DAI will usually go through a process that involves CDP. In this process, you will get DAI by providing an ETH guarantee which you can redeem later. After the process, you will get the amount of DAI you want and use it according to your needs for an unlimited period of time. But when you want to redeem your previous ETH guarantee, you have to return the amount of DAI you borrowed along with the fees you also have to pay.

In addition, according to my research results from various articles and internet browsing, there are still other strategies prepared by Maker DAO such as autonomous feedback mechanisms and external incentives that can keep DAI stable.

Thank you for reading my blog, hope it will be useful for all of you.

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@yohan2on
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