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Maker DAO

MakerDAO is an open source project on the Ethereum blockchain that aims to create a decentralized stablecoin called DAI. It uses collateralized debt positions (CDPs), where users deposit crypto assets as collateral to mint DAI tokens, maintaining a minimum collateral ratio. If the collateral value falls below this ratio, the system liquidates the position by seizing the collateral and applying a penalty to pay off the DAI debt. The goal is to provide stable cryptocurrency and new decentralized finance options.

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171 views2 pages

Maker DAO

MakerDAO is an open source project on the Ethereum blockchain that aims to create a decentralized stablecoin called DAI. It uses collateralized debt positions (CDPs), where users deposit crypto assets as collateral to mint DAI tokens, maintaining a minimum collateral ratio. If the collateral value falls below this ratio, the system liquidates the position by seizing the collateral and applying a penalty to pay off the DAI debt. The goal is to provide stable cryptocurrency and new decentralized finance options.

Uploaded by

swati ahuja
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Overview-Objectives-Constituents

Developers Oracles Keepers


• MakerDao is an open source project on the Ethererum blockchain
and a Decentralized Autonomous Organization.
• The two main components are DAI (Stable coin) and MKR Maintainers
(Governance token)
• Rune Christensen , the CEO and founder of MakerDao, first
announced the project in 2015 and the Maker Protocol which Maker Protocol
underpin the DIA stable coin , was released in 2017,
• The main objective behind creation of MakerDAO was-
• To create a decentralized operating and governance
infrastructure that allows the creation of a stable currency with
a global reach MKR Holders DAI Holders
• To create a mechanism that facilitates access to decentralized Risk Teams Vault Owners
finance (DeFi) using cryptocurrencies. Governors Users

“ Create an autonomous system controlled by smart contracts, which manage collateralized debt
positions (CDP) using Ether, with which to issue a stable currency anchored to the price of the
dollar, and thus provide new financing options in the nascent blockchain financial ecosystem.”
Collateralised Debt Position
• Users must own the asset – various crypto assets like ETH,BAT,USDC etc
• These assets are deposited into a “Vault”. Once the vault is created the crypto asset is frozen and no longer
accessible.
• Simultaneously a new token DAI , whose value is pegged to $1 is minted, and allocated to the “Vault’s creator”
• The MakerDAo system requires “Overcollateralisation” , the collateralization ratio varies from asset to asset
depending on risk profile
• The minimum collateralization ratio is maintained at 150%, i.e. If the user has $150 worth of ETH and put it in the
vault , then the maximum DAI that will be allocated will be 100
• Once issued DAI can not be repossessed by the system, the DAI can now be used for any purpose

Liquidation Mechanics
• Crypto Collaterals are highly volatile and can fluctuate considerable in a sport period
• Whenever the value of the underlying crypto collateral falls below the collateralization ratio the liquidation process
is initiated by system agents called “Keepers”
• In event of liquidation , a liquidation penalty is applied to the total debt (currently 13%)
• Vault collateral is then issued for action

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