Dai and the Maker Protocol stand at the forefront of the decentralized finance (DeFi) movement—a direct result of the many advantages that crypto and blockchain technologies bring to the financial services sector.
The Protocol provides a robust set of financial tools, while Dai, the most popular decentralized stablecoin, unlocks the value inherent in those tools. Together, the Protocol and Dai fuel a large and growing ecosystem of DeFi projects that benefits users in numerous ways.
The Attraction of the Maker Protocol and Dai
The Maker Protocol is the open-source platform through which anyone, anywhere can generate the Dai stablecoin against crypto collateral assets. Moreover, anyone can also build on top of the Protocol, thanks to its composability.
Unlike other popular stablecoins, Dai is user-generated, meaning only Maker Vault users can create it (no third party issues or administers Dai). It’s also decentralized, meaning users always have complete independent control over their Dai. Finally, because it’s open-source, developers can integrate Dai into their projects. As such, Dai offers advantages that fiat currencies can’t:
- Fast, low-cost transactions
- Borderless transfers
- Immutability and auditability
Who Uses Dai?
People inside and outside the crypto sphere generate and/or buy Dai, and then use it or hold it for reasons ranging from curiosity to practicality.
Dai generators use Oasis.app to deposit crypto collateral into a Maker Vault to create Dai. Every Dai in existence was generated in this way. People generate Dai to pay for goods and services in a stable currency without having to sell their underlying collateral asset (ETH, wBTC, etc.).
Not all Dai users generate the stablecoin themselves. Some purchase Dai from an exchange or receive it from friends or relatives. With Dai in their wallets, people use it in different ways, including:
- To purchase goods and services. More and more merchants choose to accept Dai as payment.
- To engage with a wide variety of DeFi apps, such as the savings protocol Compound and digital art and collectibles markets, like Opensea.
- To save. Users lock Dai in the Maker Protocol’s own Dai Savings Rate (DSR). When the DSR is above zero, users can earn on the Dai they hold by placing it into the DSR contract. Dai held in the contract can be unlocked at any time.
- To seek stability. In regions suffering hyperinflation, such as parts of Latin America, Dai users benefit from the value of a crypto dollar.
Dai also appeals to crypto enthusiasts, who like to keep track of the latest developments in the DeFi space and engage with the technologies they believe might become the solutions for what ails the global economy.
Similarly, crypto-curious individuals experiment with Dai on the recommendation of friends or family, or start their Dai journeys by following the news of major corporations and central banks interested in launching their own stablecoins.1https://www.weforum.org/press/2020/01/central-banks-waking-up-to-digital-currency-create-new-framework-for-cbdc-deployment-with-world-economic-forum-177ca5d9ee/
Enterprises are also increasingly exploring Dai in various ways. At one end of the spectrum, exchanges play important roles in the DeFi ecosystem by listing the token and providing liquidity via their communities of traders. At the other end are small- and medium-sized businesses that use Dai for everyday payments. In the middle, fintech companies act as bridges between consumers and the blockchain by providing debit card integrations. Dai-enabled debit cards, for example, allow users to spend Dai frictionlessly anywhere Mastercard or Visa are accepted.
Finally, developers are very special business users. Dai’s network effect and popularity make it the ideal choice for integration with the most essential DeFi projects. Users of particular note are:
- Dapp builders, who create decentralized exchanges (DEXes), aggregators, DeFi protocols, and other products and services.
- Game developers, who integrate Dai to provide a much-needed plug-and-play financial ecosystem within their video games. The programmable nature of Dai enables the creation of valuable features and rich in-game economies, providing players with new opportunities, digital goods, and unique collectibles.
One Protocol, One Dai Stablecoin, Many Reasons to Engage
The Maker Protocol and the Dai stablecoin bring the fundamental benefits of transparency, security, and efficiency to users. Every day, people all over the world derive value from generating Dai and, in doing so, provide value to the Maker ecosystem. The number of people that use Dai will only grow in the coming years, as more and more individuals, businesses, developers, and other parties grasp the advantages of decentralized crypto assets.
Visit the Maker Ecosystem page to discover the many dapps made by the Maker community.