Description

MakerDAO (DAI) – Algorithmic stablecoin system

MakerDAO is a decentralized finance (DeFi) protocol that manages DAI, a decentralized, algorithmic stablecoin pegged to the U.S. dollar. Unlike traditional stablecoins backed by centralized reserves, DAI maintains its stability through an automated system of smart contracts and collateralized debt positions (CDPs) on the Ethereum blockchain.

Key Features:

• Decentralized Stablecoin (DAI): A crypto-collateralized stablecoin that maintains a 1:1 peg with USD through smart contract mechanisms.
• Collateralized Debt Positions (CDPs): Users lock up assets (ETH, BTC, USDC, etc.) as collateral to generate DAI, ensuring its value remains stable.
• Overcollateralization Mechanism: To prevent liquidation risks, borrowers must deposit collateral worth more than the DAI they generate.
• DAI Savings Rate (DSR): Users can deposit DAI into the DSR contract to earn passive interest on their holdings.
• MKR Governance Token: Holders of MKR participate in decentralized governance, voting on risk parameters, collateral types, and system upgrades.
• Automated Liquidation System: If collateral value drops below a safe threshold, the system automatically liquidates assets to maintain solvency.
• Multi-Collateral Support: Allows a diverse range of crypto assets as collateral to enhance stability and risk diversification.