DAI is an ERC-20 stablecoin token with a fixed price of $1.
Through the Maker platform, it can be "loaned" by smart contracts called “collateralized debt position”, using Ethereum (ETH) as collaterals. The contracts lock a volume of ETH as a collateral and grant DAI proportionally, charging a small fee in MKR (which is burned). The collateralized ETH can be fully retrieved once the DAI loan is paid.
Unlike other stablecoins, DAI isn't backed by a physical asset, but by ETH. In doingShow more [+] he collateralized rates are set by voters on the Maker blockchain to reflect ETH variations in relation to USD and thus maintain a positive collateral balance. In cases where the collateralized value in a CDB becomes lower than the minimum amount needed to cover for the DAI loaned (as a result from ETH devaluations), the locked ETH is sold and the contract is liquidated.
If the amount of collateral is not enough to back the loaned DAI, more MKRs are created and sold in the open market to cover it. Thus, MKR voters are encouraged to set intelligent collateralization parameters that both encourage new contracts, increasing the MKR value while accounting for defaults risks.
Big news for the crypto world! The highly anticipated Polygon airdrop is officially underway. Visit their website to verify your eligibility and secure your free Matic tokens. I just received 900 Matic worth $460; your rewards may differ based on your blockchain activity.
Big news for the crypto world! The highly anticipated Polygon airdrop is officially underway. Visit their website to verify your eligibility and secure your free Matic tokens. I just received 900 Matic worth $460; your rewards may differ based on your blockchain activity.
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