When investing in virtual currency, you need to do your research. We provide you with reviews of each world top cryptocurrency out there, so that you can find the best crypto coins to invest in for you. This is a review of Maker.
Similar to Tether and Paxos, that we have mentioned on Cryptowisser before, Maker is an asset-backed collateralized token that users can redeem towards their underlying backing asset. In this case however, the proprietary collateralized token for Maker is backed by Ethereum as opposed to FIAT currency. They are creating this ecosystem with the simple banking system as it’s basis. However, in this case they have employed blockchain technology to allow simpler and swifter international payments and P2P transfers.
They are virtually copying the fractional reserve banking ideals that cryptocurrencies are revolting against, but fine-tuning them for the application of blockchain. Consequently, users can regard this as a sanctuary which avoids the volatility of main markets. This way, they are removing one of the big obstacles in the way for mass adoption of cryptocurrencies. For example, there’s hardly anyone who wants to spend 10,000 in crypto to buy a pizza, to then find out 8 years later that the value has skyrocketed to tens and tens of millions of dollars.
The Maker organization has named their stablecoin, DAI. 1 DAI = 1 USD. But, as we mentioned earlier, this currency is pegged to Ethereum. Consequently, they have created DAI as a ERC20-token on the Ethereum blockchain, and it cannot be mined. Instead, the MKR tokens are burned in order to sustain stability of DAI to keep it hovering around 1 USD.
MakerDAO, is a truly ambitious project in the vast jungle of collateralized stablecoins. It took the developers three full years to deploy the currency on the Ethereum mainnet, so obviously they are diligent on delivering a stable solution. With the collaborational model of DAI, MKR and ETH they can ensure a different type of stability than other asset-backed tokens.