What Is MakerDAO?
MakerDAO is a platform that issues the over-collateralized, debt-backed DAI stablecoin. It allows users to deposit approved collateral types and borrow newly minted DAI tokens against this collateral.
Background
Rune Christensen founded MakerDAO in 2015.
How It Works
Users can deposit any approved collateral type and borrow DAI against it. This loan can be repaid at any time to redeem the collateral. However, if the value of the collateral falls below a predetermined loan-to-value ratio, the loan may be liquidated. MKR token holders can vote on various decisions, such as supporting new collateral types, establishing processes, and electing parties.
The platform is governed by MKR, the fee-sharing and governance token of MakerDAO. Any surplus fees earned by the protocol are used to buy back and burn MKR tokens, thus reducing their supply. Additional MKR can be minted and auctioned in bad debt to recapitalize the system.
Key Takeaways
- MakerDAO is a platform that issues the DAI stablecoin, which is over-collateralized and backed by debt.
- The platform was founded by Rune Christensen in 2015.
- Users can deposit approved collateral types and borrow DAI against them, with loans repayable at any time.
- MKR token holders can vote on various decisions, such as supporting new collateral types and establishing processes.
- The MKR token governs the platform, with surplus fees used to buyback and burn MKR tokens, thus reducing their supply.