Stablecoins are drawing more and more attention lately as they can hedge the traders\u2019 risks to save the value of the assets. The most popular stablecoins are collateralized with US dollar and other fiat currencies or precious metals and they are criticized for not being decentralized. But there is MakerDAO \u2014 a project producing the stablecoin that doesn\u2019t rely on a central authority.MakerDAO is an open-source platform on the Ethereum blockchain and a Decentralized Autonomous Organization that solves the problem of cryptocurrencies value change. There are two ERC20 tokens in MakerDao\u2019s system: Maker (MKR) and DAI (DAI).Maker was created to support DAI and maintain the system. MKR is the governance token used to vote on several decisions and changes inside the project. It can be created or burned to save the DAI price. MKR coin\u2019s value depends on the success of its products and the upkeep of its projects.DAI is a collateral-backed stablecoin whose value is pegged to the USD at a 1:1 ratio. The Maker platform stabilizes the value of DAI and the Ethereum blockchain provides independence from centralized organizations. Generated DAIs can be used as a payment method and transferred between Ethereum wallets.Users deposit Ether into a smart contract. The asset is considered collateral for a loan. Once the assets are deposited, the smart contract issues equivalent value in DAI. So the DAI holders are ensured that the currency is backed with ETH, it won\u2019t exist otherwise.To withdraw deposited Ether, the user has to pay back in DAI.MakerDAO algorithms control the DAI price, thus the contract parties don\u2019t require to trust each other to keep up currency stability. If the system works as intended, MKR holders benefit because the total MKR supply decrease, and its price rises accordingly.When the price of DAI is below $1, the smart contract\u2026<\/p>","protected":false},"excerpt":{"rendered":"
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