MKR, Maker project introduction
MakerDAO is a decentralized autonomous organization and smart contract system on Ethereum, providing Dai, the first decentralized stable currency on Ethereum. DAI is a hard currency backed by digital asset mortgages and is anchored at 1:1 with the US dollar. MKR is the governance token and utility token of the Maker system, which is used to pay the stability fee for borrowing Dai and participate in the governance system. Unlike the Dai stable currency, the value of MKR is closely related to the performance of the entire system due to its unique supply mechanism and role on the Maker platform. The decentralized stable currency Dai has key applications in mortgage lending, leveraged trading, hedging and value preservation, international remittances, supply chains, and government public bookkeeping.
Maker DAO Token
Maker DAO system is composed of multiple smart contracts (Sai Tap, Sai Tub, Vox, Medianiser, etc.) and ERC-20 communication Token composition. Together they ensure the stability of the DAI token.
Project Features
1. Balance the contradictions in the system:
If ETH depreciates rapidly, the value of Dai's collateral will drop rapidly, causing the system to collapse. Users who hold a large number of Dai will experience a run, and the value of Dai will quickly depreciate. Just as a large number of depositors are asking for deposits from banks, banks are experiencing a liquidity crunch. So Maker created the MKR token. Let CDP's staking rate be voted on by MKR holders. As the administrator of the system, you will receive certain rewards. However, when there is insufficient collateral in the system to cover the value of Dai, MKR will create new Dai to make up the value. This provides a strong incentive for MKR holders to standardize the coefficient of Dai creation, and if the system fails, it is they, not the Dai holders, who lose. Through the MKR token, the contradictions in the system can be balanced, the value of Dai can be stabilized with the dollar, and the confidence of investors can be enhanced.
2. Ultimate Guarantee - Global Clearing:
Although the system has layers of protection to avoid crashes, the Maker team created developed a global clearing system to withstand unpredictable crises. When the global clearing system is triggered, the entire system will be frozen, and all Dai and CDP holders will be returned to the collateral. If a global settlement procedure is triggered and users own 100 Dai, 1 ether is worth $100, and users can exchange their 100 Dai directly through a smart contract. Global settlement can be triggered by a group of trusted people who hold the global settlement key. The only thing that global clearing can do is to return your collateral, it will not trade on your behalf, so it is a decentralized design that can help you recover the most losses.
3. Leverage function:
In the Maker system, it can be found that Dai is actually a loan in exchange for ETH. Users can continue to use Dai to go to the market to buy ETH, and then recycle. Although the mortgage rate gradually reduces the amount of Dai loaned out, it also allows users to use several times the leverage, and the financial attributes are very strong. This is like using the mortgage bank loan money to continue to buy real estate, it is all financial leverage.
