To dive deeper, check out the complete article from original soruce:
https://droomdroom.com/guide-to-makerdao-and-dai/
MakerDAO is a decentralized autonomous organization (DAO) on the Ethereum blockchain that governs the creation of Dai, a decentralized stablecoin pegged to the US Dollar. Dai maintains stability by allowing users to generate it through Ethereum-based assets deposited in Maker Vaults. This decentralized process ensures no central authority controls Dai, and its governance is community-driven through MKR token holders.
Originally backed solely by Ethereum, Dai transitioned to Multi-Collateral Dai (MCD), allowing a variety of assets to enhance stability. MakerDAO employs mechanisms such as the Stability Fee, Dai Savings Rate, and liquidation processes to maintain Dai’s $1 peg.
Dai’s use cases extend beyond DeFi, providing financial inclusion in regions with high inflation, offering stable digital payments, and supporting gaming economies. It’s also used in charitable donations for transparency and traceability.
With DeFi evolving, Dai is set to expand through Layer 2 solutions and cross-chain interoperability, potentially interacting with central bank digital currencies (CBDCs) in the future. MakerDAO and Dai are crucial in shaping digital finance, providing a stable, decentralized alternative to traditional financial systems. 🚀
