Hello guys this is my third day on PUBLISH0X and i am very much pleased to see the response from the readers out here. In this article i am going to share you everything about one of the most popular stable coin DAI. Before that lets fully understand what stable coin is.
Introduction to stable coin
Many Popular and top cryptocurrency like Bitcoin, ethereum etc are very volatile in nature. Recently bitcoin value falls from nearly 10k to bellow 9k within a short period of time. With Such kind of high volatility nature cryptocurrencies like bitcoin are not suitable for everyday use in real world. As a medium of exchange cryptocurrency should have low inflation and maintain stability of their price and purchasing power. This solution is brought by stablecoin.
Hence Stable coin is a cryptocurrency that maintain the stability of highly volatile nature of cryptocurrency by the method of collateralisation. This cryptocurrency family can be linked to the real world assets like gold, oil. Because of its highly stable nature it can be used as a means of transaction, payment for utilities etc just like fiat currency.
Also since it is backed by resserved asset like USD it provides the investor an opportunity to trade between different cryptocurrencies. There are different type of stable coin and DAI is one of the most popular stable coin.
What is DAI stable coin
DAI was developed by its parent company MAKER DAO in 2016 under the Ethereum blockchain.DAI is an ERC20 token which is pegged with reference to 1 USD. It is the first fully decentralised stable coin built under the Ethereum blockchain and it does'nt used a fiat currency. Instead it works under the smart contract protocol. Hence it is not issued by any centralised authority. DAI comes under the category of crypro-backed stable coin.
With all this feature DAI can be a new game changer in the Ethereum as well as in the DeFi ecosystem. I will be taking about the advantage of DAI and why it is a game changer in the latter part of this article . Now lets talk about its parent company MAKER DAO
MAKER DAO and its Team member
Maker DAO is the community behind the MAKER protocol and an organisation under the Ethereum blockchain which aims in maintaining the stability of DAI . It was launched on March 2015 before the birth of Ethereum.The term MAKER implies the Market Maker and DAO stands for Decentralised Autonomous Organisation.
Maker DAO protocol allows people to obtain loans without the need of KYC and the loan is denominated to the DAI stable coin. Moreover MAKER DAO has made many big partnership in the market with highly truted companies like REINNO, The world bank, Airtm,Sandbox, Instars, celer Network etc.
The Maker community is comprised of highly qualified, talented and dedicated members who are focusing on making the organization complete decentralised.The team is headed by Rune Christensen as the CEO, Steven Becker as the president and COO and Adrian Le Bas as the Head of Developer Experience and many others.
How DAI maintain its stability
The stability nature of DAI is maintain by a method called peg and CDP (collateralised Dept Position). Peg is the method of fixing the value or rate of one currency with reference to the value of another currency. DAI is peg with reference to 1 USD.Collateralised Debt Position (CDP) is another mechanism to maintain the stability of DAI. A concept developed by MAKER DAO in 2014 in order to bring a solution with regards to the highly volatile nature of cryptocurrency.
The mechanism behind DAI is built so as to insure that user can make some passive income when the value of DAI is less than 1$ and at the same time maintain the market stability.
Advantage of DAI over other cryptocurrency
Dai is the first fully decentralised Stable coin ever developed and this is the first advantage of DAI as there is no need to relay on any centralised authority. And hence cannot be shut down. Being stable and decentralised in nature this coin is listed among many of the popular exchange platform. It can also be store in any ERC20 compatible wallet and trade just like other popular ERC20 token. Also because of its stability DAI can also be used as a medium for payment of salary, utilities, rent etc in our real world.
Besides DAI is the most important asset in Defi ecosystem as it account for more than 50% of total asset locked up on DeFi pulse. And lately according to Defipulse report the number of DAI locked up in the Ethereum based Aave lending protocol has doubled from 2.1 million to 4 million. Till now Defipulse locked up crypto asset worth over 1 billion dollar particularly in BTC, DAI and ETH.
Drawback of DAI
Being developed and based on Ethereum blockchain there is still a concern about the volatility nature of Ethereum. Besides it stability and being decentralised in nature conversion of DAI to a regular or fiat currency is a difficult task. Users have to go through the same method of exchange just like in other cryptocurrency . Above all DIA being a stable crypto doesn't not meant it is for traders as there is limited availability of order book in many exchange platform.
Conclusion
Considering its highly stable nature as a cryptocurrency and when we look at the partnership with its parent company Maker Dao with many reputed source .DAI has a ver big long term future and is one of the most popular and highly stable cryptocurrency ever invented.currently it is ranked 59 in coinmarketcap.
