We are all waiting for it. With every month which goes by on the calendar, and every stride which cryptocurrency takes towards destroying the perception that it is a ‘fad’, we come closer to mainstream adoption.
One of the obstacles to widespread uptake thus far in the cryptocurrency story has been price volatility. In the case of Ethereum, one way of preventing this volatility is the MakerDAO DAI.
Dai offers everybody in the world the chance to invest in a ERC-20 token which has the ability to hang on to its purchasing power. It has been specially designed to minimise price volatility against the US dollar, making it a digital currency which is capable of enabling next-generation financial applications.
The maker community can now welcome its first thanks to MakerDAO DAI. Dai is backed by Ethereum as its collateral and is ‘soft-pegged’ to $1. This means that MKR holders can always conduct a global settlement of Dai because users who hold Dai at the time in which a global settlement is enacted can receive a claim to $1 worth. There is room for additional upgrades in the future and fresh Dai deployment.
It is planned the Dai design will see a continuous iteration, and that globally settling before deployments will be able to enforce upgrades. In the scenario that a Dai instance hits the debt ceiling, a necessary option may be to resettle it. The first Dai instance currently has a debt ceiling of $50 million. Dai’s final iteration will see its recapitalisation financed by multiple collateral types and MKR dilution.
Maker’s Dai stable coin on OMG DEX has won the approval of the Crypto Spy news platform, which said: “This currency is ideal for a stable store of value, as its infrastructure is decentralized, meaning it is without a central operator.”
Meanwhile, Bitcoinist’s editorial highlighted the volatility in the cryptocurrency market, and the need to address it: “Let’s face it, the cryptocurrency market, in general, is far from stable. Over the past six months, the market cap of the cryptocurrency space has been a gut-churning rollercoaster ride from one hundred to eight hundred billion dollars and everywhere in between.”
It looks likely that the leading stable coins, such as Dai, will continue to grow in strength thanks to the pegging of their value outside the blockchain. There is already talk of stable coins linked to assets such as gold and oil.
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