“I believe in decentralized management that includes a lot of delegation, empowerment, and accountability.” -Anthony Scaramucci
MakerDao was started as one of the very first decentralized finance projects on the Ethereum network. This project has become so big that almost 2% of all ETH is held on the MakerDao network! The founders of MakerDao set out to create an ecosystem in which you as a user can store and borrow money without a middle man (bank) being involved.
Users need a MetaMask wallet and some ETH to get started. Once you have moved some ETH into your Maker Vault, you can use that ETH as collateral to then create x amount of DAI as a loan using the networks smart contracts. This DAI coin is the stable currency of the network, that loans are distributed and paid back in. The last bit of the MakerDao network is the Maker coin. This Maker coin is created and burned to keep the value of DAI stable, and consistent with the USD. MakerDao has successfully created a decentralized banking platform with automatic checks and balances in place to keep DAI stable, and protect users. For example: if someone has 2 ETH stored in their vault and has an outstanding loan when ETH price crashes the network will liquidate the position automatically and create MKR to sell on exchanges to ensure that the price of DAI does not crash with the loan corlatoral, if you flip the story when ETH price goes higher the network automatically burns MKR coins to keep the DAI price stable. MakerDao has successfully created an automatic banking system, and DAI has become a very widely accepted cryptocurrency because of its stability.
Decentralized finance has exploded into such a vast and ever changing ecosystem, but of all the new disruptions and DAPPS not many other projects have had the profound impact that the MakerDao protocol has. This blockchain has been a great use case for what decentralized banking can look like, and has shown that communities can govern themselves free of government, and regulatory overreach by banking systems. Holders of MKR coins can send, request and vote on network improvements to benefit the users and community, it is like a very large board of directors using their MKR to make a difference in the network.
DAI and MKR have created an awesome checks and balance system, and DAI has great reasons to be utilized as a payment method for vendors, and consumers. MKR is the most valuable ERC20 coin out there and becoming more valuable as it is burned with the rise is ETH price. MakerDao is also expanding the neutron to take its governance system to other crypto currencies and are working hard at replacing banks; it will be interesting to see where this project goes, as more and more people want to get banks out of their money. We hope you appreciated the read, look out for more crypto information coming soon. Please shoot us an email with any feedback, or if you want a sticker!
