*image credit: makerdao.com
Back in February 2019, the Wirex cryptocurrency portfolio gained its very first stablecoin: the Dai token. For us, stablecoins are a natural fit - with their stable value and decentralised nature, they perfectly combine the benefits of both traditional and digital currencies.
Dai (DAI) was the world’s first decentralised stablecoin built on the Ethereum blockchain. It was created in 2017, by the decentralised autonomous organisation (DAO), Maker, which was established in 2014.
Uniquely, DAI manages to maintain a steady value of one US Dollar, despite being soft-pegged to, but not backed by, USD. It cleverly ensures a stable value without any form of centralised authority or bank, through backing by Ether collateral escrowed into smart contracts on the Maker platform.
The Maker platform is a decentralised smart contract platform that exists to minimise the price volatility of the Dai token. The platform stabilises the value of DAI through Vaults - Maker’s unique smart contracts which hold the collateral. Dai tokens are created simply by depositing Ether into a Vault, which then stays locked away until your DAI loan has been paid off.
However, due to the fluctuating nature of ETH, this Dai-stabilisation system requires further backup. Enter MKR. The Maker platform’s second token, MKR is a volatile utility token whose holders play a part in stabilising DAI through community governance, while MKR itself covers any unpaid DAI debts should a vault fail to remain over-collateralised.
Put simply, MakerDAO is a DAI lending system made up of smart contracts, which is governed by MKR holders.
At the end of last year, a next-generation version of the token was introduced by Maker, which changed things up a bit. Our familiar single-collateral DAI became known as SAI (or SCD), and new multi-collateral DAI (or MCD) were introduced, which can be backed by multiple, non-ETH collateral types. Since this decision, SAI was gradually phased out and eventually shut down altogether in May this year.
Why buy DAI? The token’s low volatility is its main USP. In addition, Maker claims that the token makes financial services available to anyone, without any arduous requirements or third-party interference. Add to this the blockchain-based benefits of transparency and being able to make quick, cheap cross-border payments, and it’s not hard to see why so many people are interested in this innovative stablecoin.
Since the spotlight is on Dai this week, we’ve decided to throw a little competition on our Twitter and Instagram channels! All you have to do is go to our latest posts on Twitter and Instagram to see the full details on how to enter.* That’s it. We will be awarding 2 lucky winners with 50 DAI each into their Wirex DAI account.
1. For full entry details, entrants must check the associated Twitter and Instagram posts.
2. The competition closes on (05.07.2020 11:59PM BST).
3. Winners must be a verified user with an activated Wirex DAI account.
4. Four winners total will be chosen across Twitter and Instagram.
5. Winner will have 50 DAI funded into their Wirex DAI account.
6. We will announce the winners on our community forum in this post on 07.07.2020.
7. Once the winner is contacted, the winner will have to provide the requested details within 48 hours to claim their prize. Otherwise it will be forfeited and another winner will be chosen.
8. We will award the DAI to the winner once they have been contacted in approximately 7-10 working days time.
9. This promotion is in no way sponsored, endorsed, administered by, or associated with, Instagram or Twitter.