19 Nov 2019 Samantha McLauren
Multicollateral Dai Lifts MakerDAO Over Ethereum
Stablecoins, such as Tether’s USDT and the much-anticipated Libra crypto project, are primarily pegged to a single fiat currency, or a basket of fiat currencies. MakerDAO’s DAI token was among the few stablecoin projects to offer Ethereum-based backing. Now, DAI’s token has also started supporting Brave’s Basic Attention Token (BAT) as a means of securing DAI’s price. MakerDAO plans to include 0x, and Augur as backing cryptocurrencies at a later stage.
The updated “smart contract” algorithm would allow DAI to keep a steady price, despite Ethereum’s and BAT’s possible volatility. The contract also works in cooperation with DAI’s Saving Rate – a specialized fund, which refunds the users for price volatility issues.
MakerDAO also rebranded its DAI project, giving it a more currency-like appearance. The two strikethrough lines closely resemble the look of the Euro. The rebranding, however, comes with stronger core changes, such as getting rid of the Collateralized debt positions term to replace it with the simple “vault”. This means that users can store collaterals to the vault to issue their own DAI tokens,” MakerDAO explained.
The locked collaterals are entirely traceable, giving the MakerDAO ecosystem the much-needed transparency. While central bank-issued fiat currencies peg other stablecoin projects, DAI’s crypto basket pegging is created with a mechanism to prevent volatility – the total amount of DAI in circulation will never exceed the number of tokens, stored in DAI vaults.
Regulatory bodies across the globe still don’t believe that such a move would be beneficial in the long run. DAI fell out of the discussion at G7 meeting because “the ability to maintain a stable price medium and long-term is still unclear."
Despite regulatory uncertainty, the project receives its much-needed attention boost, primarily from island countries, such as Vanuatu. Argentina is also reaching out to a more decentralized method of value transfer – Argentinians are reaching out to DAI to help secure their savings against the falling peso price amid riots in the country.Ethereum Tether stable coin Ethereum news BAT Basic Attention Token BAT token loan maker Stablecoins USDT DAI