Maker
Decentralized Finance (DeFi), Governance, Lending/Borrowing Protocols, Avalanche Ecosystem, Polygon Ecosystem, Near Protocol Ecosystem, Arbitrum Ecosystem, Ethereum Ecosystem, Real World Assets (RWA), Paradigm Portfolio, Index Coop Defi Index, Stablecoin Protocol, DragonFly Capital Portfolio, Andreessen Horowitz (a16z) Portfolio, Energi Ecosystem, Sora Ecosystem, GMCI DeFi Index, RWA Protocol, Index Coop Index, GMCI Index, Polychain Capital Portfolio
About Maker
Maker is a decentralized autonomous organization (DAO) on the Ethereum blockchain that seeks to minimize the price volatility of its own stablecoin, Dai, against the US Dollar.
Maker was founded in 2015 and is one of the oldest projects in the DeFi space. It consists of a series of smart contracts that are designed to maintain Dai’s value by using a system of collateralized debt positions (CDPs). When users open a CDP, they must deposit an amount of Ether (ETH) as collateral.
This ETH is then used to generate Dai through a process called “minting”. The amount of Dai generated depends on the amount of ETH deposited and is determined by Maker’s Target Price Feed. The Target Price Feed is an algorithmically-determined price that Maker uses to ensure that 1 Dai always equals 1 USD.
The user can then use their newly minted Dai for whatever purpose they desire, such as making payments or trading on decentralized exchanges. When they are ready to close their CDP, they must pay back the amount of Dai they borrowed plus any stability fees accrued during their time with the CDP open. Once this is done, their ETH collateral will be returned to them minus any liquidation penalties incurred if their CDP became undercollateralized at any point during its lifetime.
In addition to minting and burning Dai, Maker also has a governance system which allows MKR token holders to vote on changes to the protocol such as new features or fee structures. This system helps ensure that Maker remains decentralized and allows it to remain agile in responding to market conditions and user feedback.
