Hello Publish0x community and welcome back in this new article of my “Easy & Short Cryptocurrencies Made Accessible” area.
With this article we are going to introduce the 49th cryptocurrency of this section with the 104th “E&S” article.
We are almost at 50 crypto analyzed in our “Easy & Short”!
Today we start to see another crypto. As probably have you already read from the title, we will talk about a stablecoin: DAI!
In the last review, I talked about Wrapped Ethereum (WETH), If you missed my last review, you can recover it here: https://www.publish0x.com/easyshort-cryptocurrencies-made-accessible/e-and-s-token-review-wrapped-ethereum-weth-xeevwoe
First, what is a Stablecoin?
A more than legitimate question for anyone entering the world of cryptocurrencies, which presents a rather complex set of terms and dynamics. But, if the goal is to make transactions in this area, then you really cannot ignore knowing these factors.
A Stablecoin is a currency that mirrors the value of the fiat currency to which it is pegged, maintaining a constant 1-to-1 ratio. Too complex? It is much simpler and more straightforward than it might seem. Let's start with fiat currencies, which are the banknotes you clutch in your hands every day, and which are used around the world in normal transactions. This group includes the Euro, the Dollar, the Yen, and any other national currency on the face of the earth.
Stablecoins are their digital transposition, that is, a cryptocurrency that maintains a 1-to-1 relationship with the fiat currency the creators have chosen. So, a digital dollar must always be worth as much as a physical dollar, otherwise there would be no point in the existence of such a Stablecoin.
Why use a crypto when fiat currency exists?
Simple, because the cryptocurrency world moves too fast and on completely different tracks than traditional finance. On exchanges, people move billions of dollars in a very few seconds, which fits poorly with the dynamics of paper currency. Imagine having to deal with banking intermediaries every time you carry out a transaction, having to submit to technical times, conversion costs, weekend closures and other issues typical of this industry. That would be quite a detriment to a world that is going at breakneck speed and trying to operate completely autonomously.
Image source: CoinMarketCap
What is DAI?
The cryptocurrency Dai (DAI) is an ERC-20 token that is designed to function as a stablecoin or stable currency whose value is pegged to the dollar. This currency is issued in a decentralized manner through the collateralization of collateral that serves to always guarantee its issuance.
The currency and the entire protocol that supports its operation were designed by MakerDAO, one of the projects with the longest history in the ecosystem. Indeed, MakerDAO is a project that has demonstrated unprecedented transparency, technical and economic quality. All this has made it the stable currency, or stablecoin, that does not need to provide fiat collateral, making it one of the world's favorite tokens.
The origin of DAI, the first decentralized stablecoin
The origins of DAI begin with the creation of MakerDAO in 2014. Since then, the project aimed to create a DAO to support a stable currency within Ethereum. The idea was something totally new, something like it had never been built before, and its developers took enough time to design a clear proposal on how to do it without failing.
So, the first version of DAI was released. With this, it became the first structure of a highly decentralized stablecoin. Its control was governed by smart contracts or smart contracts and not by fiat on a bank account. Moreover, all its variables were decided by a DAO, in which token maker (MKR) holders could participate.
The birth of DAI gave a huge boost to the DeFi ecosystem, which was only a few months old and was proof that something big was yet to come. Since then, this has been one of the most eye-catching stablecoin projects in the cryptocurrency world. Its transparency, wide acceptance, and the enormous flexibility of its operation have made it a model for development in the cryptocurrency world.
Next week we'll see new details about Dai!
I invite you to follow me so you don't miss the second part of the article that will be released next Sunday.
What’s your favorite stablecoin and why?