User:RandomWalker/MakerDAO
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MakerDAO
MakerDAO is a decentralized autonomous organization behind the Dai cryptocurrency stablecoin.[1] MakerDAO initiated smart contracts enable people to deposit collateral and take out loans in Dai. MakerDAO seeks to stabilize the price of the Dai to keep it pegged to the U.S. dollar.[2] By controlling the collateral types and amounts for borrowing Dai from its smart contracts and the interests rates for borrowing Dai from or storing Dai with its smart contracts, MakerDAO influences the amount of Dai in circulation, and thus its market price.[3] As of November 2020, more than $2 billion is deposited in MakerDAO smart contracts.[4]
MakerDAO's smart contracts are deployed on the Ethereum blockchain.[5] The organization has its own cryptocurrency governance token, MKR. Anyone who owns MKR can vote on MakerDAO proposals in amount proportionate to their amount of MKR in relation to its total circulating supply.[3] The MKR token is also used for investment, as its supply is deflationary; borrowers of Dai must send some MKR to a burn address when repaying a Dai loan, which permanently takes that MKR out of circulation.[3]
MakerDAO is credited with being the first decentralized finance or "DeFi" platform.[6]
MakerDAO was formed in 2014 by Danish entrepreneur Rune Christenson.[7] It has received over $25 million in funding from venture capital firms, including Andreessen Horowitz and Polychain capital.[8] Andreessen Horowitz made its investment by purchasing seven percent of the supply of MKR tokens, which gives it seven percent of the voting power for MakerDAO.[3]
In 2018, MakerDAO formed the Maker Foundation, run from Copenhagen, which serves to help bootstrap the ecosystem by, for example, writing code needed for the platform to function and adapt.[9]
MakerDAO experienced internal struggle in 2019 over whether it should move on from its cryptoanarchist roots and integrate more with the traditional financial system. Christenson wanted greater regulatory compliance to allow for assets besides cryptocurrency to serve as collateral for Dai. The struggle led to the departure of MakerDAO's CTO.[7]
MakerDAO was successfully able to keep the price of Dai close to one U.S. dollar during its first year of existence, even though the price of Ether, the only collateral available at the time, declined by more than 80% over that period.[3]
References[edit]
- ^ Chavez-Dreyfuss, Gertrude (June 26, 2019). "U.S. bitcoin ATM operator to add Dai stablecoin, launch remittance service". Reuters.com. Reuters. Retrieved 14 November 2020.
- ^ Stabile, Daniel T.; Prior, Kimberly A.; Hinkes, Andrew M. (July 31, 2020). Digital Assets and Blockchain Technology. Edward Elgar Publishing. p. 263. ISBN 9781789907445. Retrieved 14 November 2020.
- ^ a b c d e Hackett, Robert; Roberts, Jeff John; Wieczer, Jen (October 1, 2018). "Why Crypto's Newest Venture Capitalists Bet Millions on an Ethereum "Stablecoin"". Fortune.com. Fortune. Retrieved 14 November 2020.
- ^ "Maker". defipulse.com. DeFi Pulse. Retrieved 14 November 2020.
- ^ Leising, Matthew (August 11, 2020). "Jay-Z, Charles Schwab-Backed Ethereum App Opens Doors to Public". Bloomberg.com. Bloomberg. Retrieved 14 November 2020.
- ^ "Why 'DeFi' Utopia Would Be Finance Without Financiers: QuickTake". Bloomberg. 2020-08-26. Retrieved 2020-10-06.
- ^ a b Marsh, Alistair (October 5, 2019). "Crypto Rebels Trip Over Each Other en Route to Financial Utopia". Bloomberg.com. Bloomberg. Retrieved 14 November 2020.
- ^ "MakerDAO". crunchbase.com. crunchbase. Retrieved 14 November 2020.
- ^ Wilson, Tom (November 18, 2019). "Crypto backed by crypto: Dai seeks to change 'stablecoin' game". Reuters.com. Reuters. Retrieved 14 November 2020.
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