{"id":10914,"date":"2023-02-27T07:45:53","date_gmt":"2023-02-27T07:45:53","guid":{"rendered":"https:\/\/www.bitnovo.com\/blog\/?p=10914"},"modified":"2022-05-17T20:14:22","modified_gmt":"2022-05-17T20:14:22","slug":"what-is-makerdao-a-milestone-in-decentralized-finance","status":"publish","type":"post","link":"https:\/\/www.bitnovo.com\/blog\/en\/what-is-makerdao-a-milestone-in-decentralized-finance","title":{"rendered":"What is MakerDAO? A milestone in decentralized finance"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Alternar tabla de contenidos\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-makerdao-a-milestone-in-decentralized-finance\/#beginnings_of_makerdao\" >Beginnings of MakerDAO<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-makerdao-a-milestone-in-decentralized-finance\/#how_is_makerdao_composed\" >How is MakerDAO composed?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-makerdao-a-milestone-in-decentralized-finance\/#how_does_the_makerdao_protocol_work\" >How does the MakerDAO protocol work?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-makerdao-a-milestone-in-decentralized-finance\/#makerdao_at_the_present_time\" >MakerDAO at the present time<\/a><\/li><\/ul><\/nav><\/div>\n<span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Tiempo de lectura:<\/span> <span class=\"rt-time\"> 4<\/span> <span class=\"rt-label rt-postfix\">minutos<\/span><\/span><div class=\"col small-12 large-12\">\n<div class=\"col-inner\">\n<p><strong>The MakerDAO protocol<\/strong>\u00a0undoubtedly marked a milestone in the young journey of\u00a0<strong>Decentralized Finance<\/strong>, better known as DeFi. So much so that if we were to write a history manual on\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-defi-o-decentralized-finance\/\">decentralized finance<\/a>, MakerDAO would undoubtedly occupy a prominent place in the timeline.<\/p>\n<p>Its cornerstone is\u00a0<strong>DAI, the decentralized stablecoin<\/strong>\u00a0that already has more than four and a half billion market capitalization. DAI has become the favorite stablecoin of millions of users. And it has been used in multiple initiatives, from funding projects, seeking investment returns and as a haven of value. Even small businesses have begun to accept it as a means of payment.<\/p>\n<\/div>\n<\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div><\/div>\n<div class=\"col small-12 large-12\">\n<div class=\"col-inner\">\n<h2><span class=\"ez-toc-section\" id=\"beginnings_of_makerdao\"><\/span><b>Beginnings of MakerDAO<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The beginnings of MakerDAO date back to 2015, when its founder\u00a0<strong>Rune Christensen<\/strong>, barely 25 years old, published an article on Reddit.\u00a0 In it, he presented his idea for a\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-a-dao\/\">DAO<\/a>\u00a0called Maker. He also made reference to the eDollar, a stablecoin built on the Ethereum blockchain, an idea that after a series of transformations\u00a0<strong>would become the current\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-dai-the-complete-guide\/\">DAI<\/a><\/strong>.<\/p>\n<p>Rune\u2019s purpose was to provide people with a stablecoin that would be a refuge against volatility. But, unlike building a centralized stablecoin like\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-tether-usdt-the-complete-guide\/\">USDT<\/a>\u00a0(launched in 2014) it proposed\u00a0<strong>a system based on the participation of diverse members<\/strong>\u00a0making decisions through voting.<\/p>\n<p>Maker marked a milestone in 2017 by becoming\u00a0<strong>the first blockchain-based protocol to launch an automated cryptocurrency lending platform<\/strong>. It was undoubtedly the kickoff that accelerated what we now identify as Decentralized Finance (DeFi).<\/p>\n<\/div>\n<\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div><\/div>\n<div class=\"col small-12 large-12\">\n<div class=\"col-inner\">\n<h2><span class=\"ez-toc-section\" id=\"how_is_makerdao_composed\"><\/span><b>How is MakerDAO composed?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The ecosystem has\u00a0<strong>3 actors working together<\/strong>: the Maker Foundation, Maker governance and the Maker community.<\/p>\n<p><strong>The Maker Foundation\u00a0<\/strong>was created by the initiating members of MakerDAO. Initially its purpose was to boost the system and lay solid foundations so that it can stand on its own as a decentralized organization.<\/p>\n<p>We call \u201c<strong>governance<\/strong>\u201d the process where a group of people make decisions about something in particular as part of that system or organization. In MakerDAO, governance happens\u00a0<strong>through a voting system that is accessed by being a holder of the MKR token.<\/strong><\/p>\n<p>As for the\u00a0<strong>Maker Community<\/strong>, we must understand it as the essence of MakerDAO. The Maker Community is made up of early adopters, Dai enthusiasts, developers, Maker Foundation employees, MKR holders and observers who choose to get involved.<\/p>\n<p>The community is globally present and interacts in discussion forums remotely. It is undoubtedly imbued with a strong social character. The DAO cannot exist without cooperation. The focus is on the usefulness and need for scientific governance of the entire community.<\/p>\n<\/div>\n<\/div>\n<div class=\"col small-12 large-12\">\n<div class=\"col-inner\">\n<div id=\"image_2081226634\" class=\"img has-hover x md-x lg-x y md-y lg-y\">\n<div class=\"img-inner dark\"><img fetchpriority=\"high\" decoding=\"async\" class=\"attachment-large size-large lazyloaded\" src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/05\/Qu%C3%A9-es-MakerDAO2.jpg\" sizes=\"(max-width: 768px) 100vw, 768px\" srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/05\/Qu\u00e9-es-MakerDAO2.jpg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/05\/Qu\u00e9-es-MakerDAO2-300x205.jpg 300w\" alt=\"Qu\u00e9-es-MakerDAO-DAI\" width=\"768\" height=\"526\" data-srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/05\/Qu\u00e9-es-MakerDAO2.jpg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/05\/Qu\u00e9-es-MakerDAO2-300x205.jpg 300w\" data-src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/05\/Qu\u00e9-es-MakerDAO2.jpg\" data-sizes=\"(max-width: 768px) 100vw, 768px\" \/><\/div>\n<\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<h2><span class=\"ez-toc-section\" id=\"how_does_the_makerdao_protocol_work\"><\/span><b>How does the MakerDAO protocol work?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Issuing DAI is possible thanks to a tool that changed the rules of the game:\u00a0<a href=\"https:\/\/oasis.app\/\">Oasis<\/a>. It offers the possibility of generating\u00a0<strong>DAI, a coin with a value pegged to USD by depositing a volatile cryptocurrency or another stablecoin (Vaults)<\/strong>. And it has even been working steadily to incorporate RealT into the protocol.<\/p>\n<p>At the beginning, it was only possible to issue DAI with ETH. The governance of the protocol proposed and voted over the last few years new collaterals, with their overcollateralization ratios, stability fees, interest rates and fees, etc.<\/p>\n<p>By issuing DAI with collateral,\u00a0<strong>their value is overcollateralized to ensure the backing of circulating DAI<\/strong>. Settlement auctions and Maker reserves are mechanisms to keep the protocol stable.<\/p>\n<p>The auctions are responsible for allowing the system to liquidate the positions of those Vaults where the liquidation ratio is negative, thus avoiding large losses in the system. The aim is to cover the obligations of the armed Vault with the liquidation penalty, but selling the least amount of collateral possible and returning the rest to the Vault holder.<\/p>\n<p>In times of market volatility where collateralized tokens drop sharply in price, the auction is exposed to not covering the issued position. For this purpose,\u00a0<strong>the Maker Reserve mechanism was designed<\/strong>, which enters the scenario by contributing the remainder of the position. If the situation becomes delicate, the amount of MKR tokens is increased in order to put them up for sale, and from there extract the money needed to pay off the debts.<\/p>\n<div id=\"image_671620955\" class=\"img has-hover x md-x lg-x y md-y lg-y\">\n<div class=\"img-inner dark\"><img decoding=\"async\" class=\"attachment-large size-large lazyloaded\" src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/05\/Qu%C3%A9-es-MakerDAO.jpg\" sizes=\"(max-width: 768px) 100vw, 768px\" srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/05\/Qu\u00e9-es-MakerDAO.jpg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/05\/Qu\u00e9-es-MakerDAO-300x205.jpg 300w\" alt=\"ranking-MakerDAO-2021\" width=\"768\" height=\"526\" data-srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/05\/Qu\u00e9-es-MakerDAO.jpg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/05\/Qu\u00e9-es-MakerDAO-300x205.jpg 300w\" data-src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/05\/Qu\u00e9-es-MakerDAO.jpg\" data-sizes=\"(max-width: 768px) 100vw, 768px\" \/><\/div>\n<\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<h2><span class=\"ez-toc-section\" id=\"makerdao_at_the_present_time\"><\/span><b>MakerDAO at the present time<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>MakerDAO has remained\u00a0<strong>in the top 5 protocols with the highest total blocked value (TLV)<\/strong>\u00a0for the last few months. We can observe this in the Defi Pulse index. Maker demonstrates its consolidation regardless of the comings and goings of the market and the DeFi ecosystem. It currently stands at over USD 9.8 billion.<\/p>\n<p>At the beginning of 2021, the MKR token began a rapid escalation in price. On January 1, it cost only US$581.\u00a0 In the month of May it is sitting above US$4500.<\/p>\n<p>The Foundation\u2019s role was always to build the Decentralized Autonomous Organization (DAO) and put it in the hands of the community, before dissolving.<\/p>\n<p>On May 3, the Maker Foundation returned 84,000 MKR tokens from the Development Fund to MakerDAO. They are now under the control of Maker governance. MKR token holders have full independent control to decide how (or if) they incorporate this amount of MKR into their future plans.<\/p>\n<p><strong>Luis Lozada,\u00a0<\/strong>MakerDAO\u2019s Business Developer for LATAM, told Bitnovo that forum members are currently discussing\u00a0<strong>what fate the returned MKR tokens will have<\/strong>: \u201cthe different teams within Maker are adding MKR vesting across a minimum of 4 years for their members, within their budget proposals\u201d.<\/p>\n<p>Several options are being considered, such as\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-token-burning\/\">burning the tokens<\/a>, spending them on staking rewards or whatever the governance decides. In that case, we would have to wait what vesting proposals are accepted and what to do with those returned MKRs.<\/p>\n<p>Lozada is part of the Growth Core Unit that works for the DAO as such. Luis adds, \u201cThe Foundation is practically dissolved and my role is to increase DAI\u2019s adoption worldwide through integrations with different partners, especially in Latin America.<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p><span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Tiempo de lectura:<\/span> <span class=\"rt-time\"> 4<\/span> <span class=\"rt-label rt-postfix\">minutos<\/span><\/span>The MakerDAO protocol\u00a0undoubtedly marked a milestone in the young journey of\u00a0Decentralized Finance, better known as DeFi. So much so that if we were to write a history manual on\u00a0decentralized finance, MakerDAO would undoubtedly occupy a prominent place in the timeline. Its cornerstone is\u00a0DAI, the decentralized stablecoin\u00a0that already has more than four and a half billion [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":6917,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[165],"tags":[],"class_list":["post-10914","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrencies"],"_links":{"self":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/posts\/10914","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/comments?post=10914"}],"version-history":[{"count":0,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/posts\/10914\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/media\/6917"}],"wp:attachment":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/media?parent=10914"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/categories?post=10914"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/tags?post=10914"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}