MakerDAO

About

MakerDAO is a decentralized lending platform built on the Ethereum blockchain. It allows users to borrow a stablecoin called DAI by locking up collateral, typically Ethereum (ETH), in smart contracts known as Collateralized Debt Positions (CDPs). This mechanism enables users to generate DAI, which is pegged to the US dollar, providing a stable cryptocurrency for various financial activities. MakerDAO operates as a Decentralized Autonomous Organization (DAO), ensuring transparency and community governance through its native token, MKR. The MKR token is crucial for governance, allowing holders to vote on key decisions, such as stability fees and risk parameters. DAI is widely used in DeFi applications for lending, borrowing, and yield farming due to its stability and decentralization. MakerDAO's system ensures that every DAI in circulation is backed by excess collateral, maintaining its value through a complex network of smart contracts rather than traditional fiat reserves. This approach has made MakerDAO a foundational element in the DeFi ecosystem, offering a decentralized alternative to traditional financial systems.