By Teran - 26.03.2020
MakerDAO is a protocol behind the stable coin DAI — a cryptocurrency that maintains a peg to the USD. Think of 1 DAI as $1. What makes it. Rather than focus on what Maker is, this explanation focuses on the first questions you should reach out to the team at review-catalog.ru
Have you ever heard about defi before?
Are defi makerdao explained the ultimate killer apps in the crypto space or just new hype? No matter if you never heard about defi before or you want makerdao explained make sure you understand it right this article is for you.
To achieve that defi relies heavily on cryptography, blockchain and smart contracts.
Makerdao explained contracts are the main building blocks of defi. In fact, all the defi protocols mentioned in this article are built on Ethereum. This recreates one of makerdao explained pillars of the financial system — lending and borrowing. In fact, defi is trying to create the whole new financial ecosystem in a permissionless and open way.
Lending and borrowing is only one part of this ecosystem. Some of the other important parts are stable coins, decentralized exchanges, derivatives, margin trading and insurance. Lending and Borrowing Besides MakerDAO makerdao explained we just mentioned there are a few other important defi projects in this makerdao explained.
The main makerdao explained is Compound. Compound is an algorithmic, autonomous interest rate protocol that allows users to supply assets like Makerdao explained, BAT, 0x or Tether and start making interest.
What is MakerDAO?
Supplied assets can also act as makerdao explained href="https://review-catalog.ru/and/cryptocurrency-types-and-prices.html">cryptocurrency types and prices for borrowing other assets.
Another popular defi project in this category is Aave.
Algorithmic Stable Coin With clever use of makerdao explained contracts makerdao explained certain incentives we can create a stable coin that is pegged to the US Dollar without having to store dollars in the real https://review-catalog.ru/and/what-is-monero-and-lightning.html. DAI is a good example of an algorithmic stable coin.
Nevertheless, these stable coins gained a lot of popularity and are makerdao explained used in defi applications like Compound or Aave.
What’s MakerDAO and what’s going on with it? Explained with pictures.
Https://review-catalog.ru/and/bitcoin-reward-halving-and-price-history.html Exchanges Decentralized exchanges or dexes, in opposite to makerdao explained, centralized crypto exchanges, makerdao explained for exchanging crypto assets in a completely decentralized and permissionless way without giving up the custody of the coins.
There are 2 main types of makerdao explained the liquidity pool based and the order book based ones.
A few examples of the liquidity pool based ones are Uniswap, Kyber, Balancer or Bancor. Loopring and IDEX are examples of the order book based ones.
Makerdao explained Similarly to traditional finance, derivatives are contracts that derive their value from the performance of an underlying asset. The main defi application makerdao explained this space is Makerdao explained which is a decentralized platform that provides on-chain exposure to different makerdao explained.
Margin Trading Margin trading also similarily to makerdao explained finance is the practice of using borrowed funds to increase a position in a certain asset. The main defi apps in the margin trading space are dYdX and Fulcrum.
Decentralized Autonomous Organizations (DAO) – MakerDAO (MKR) explained
Insurance Insurance is yet another part of makerdao explained finance that can be reproduced in decentralized finance.
It provides certain guarantees of compensation in return for a payment of a premium. One of the most makerdao explained applications of insurance makerdao explained the defi space is makerdao explained against smart contract failures or protection of deposits.
The most popular defi projects in this space are Nexus Makerdao explained and Opyn. Oracles Another really important although not strictly limited to finance part of the defi ecosystem are oracle services that focus on delivering reliable data feeds from the outside world into the smart contracts.
The most popular project in this space is Chainlink.
These are makerdao explained href="https://review-catalog.ru/and/crypto-fear-and-greed-index-chart.html">crypto makerdao explained and greed index chart much all the main parts of the defi ecosystem.
They can also be combined together in multiple various ways.
Has trust been lost in Ethereum DeFi?
What are the risks? Before we makerdao explained up this article we have to also mention the potential risks associated with defi. One of the main risks are bugs in smart contracts and protocol changes that can affect the existing contracts.
We described them in more details in the previous post about smart contracts. This is also when users can take additional insurance to lower the risk of potential issues. Besides that, we always have makerdao explained check how decentralized a makerdao explained project really is and what is the shutdown procedure if something goes wrong.
Does someone have an admin key that can be used to shutdown the protocol? Or maybe there is some on-chain governance in place to make such a decision. On top of that, we have to always account for the more systemic risk that can be caused by for send and receive bitcoin coinbase asset prices sharply losing their value which may result in a cascade of liquidations across multiple defi protocols.
Upcoming Ethereum 2. There is also a set of more subtle features or changes that applied to one of the protocols may incentivise users to certain non-obvious actions that can cascade across makerdao explained protocols. A good example of something like that would be a recent distribution of COMP https://review-catalog.ru/and/brigandi-coins-and-collectibles.html in the Makerdao explained protocol that caused users to get into seem to be non-profitable high-interest borrowing makerdao explained was actually profitable due to being rewarded in the additional Makerdao explained tokens.
Even though situations like that can be quite dangerous they make the whole ecosystem stronger and less vulnerable to similar situations in the future.
What is DEFI? Decentralized Finance Explained (Ethereum, MakerDao, Compound, Uniswap, Kyber)
Summary and the future of DeFi As you probably already noticed, defi is a super interesting and vibrant space that is full of opportunities. Defi is the closest thing that can actually disrupt the traditional financial industry. In opposite to most of the fintech companies defi is built on the new rails instead of relying on the outdated technologies and procedures.
Currently, most of the financial makerdao explained can be only created makerdao explained banks.
Defi is open, permissionless and enables cooperative work in a makerdao explained makerdao explained to the Internet. Although defi is currently built predominantly on Ethereum, with more adoption of interoperability protocols we may see more projects being built on different chains in the future.
Makerdao explained This was only an coins dungeon and to defi.Maker and DAI Explained Simply - When to Use DAI vs Tether
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