Almost 1% of the supply of Ethereum token (ETH) was blocked in Smart Contract MakerDAO

One percent of the Ethereum offer blocked in the Smart MakerDAO Contract

Mike McDonald, the founder of MKR Tools, tweeted yesterday the information that led to a bit of excitement. He stated in the tweet that,

"As of this morning, there are now 1,000,000 ETHs blocked in @MakerDAO's smart contracts, a slight rounding error from 1% of the total ETH supply."

The MakerDAO project it stands behind Dai, which is a second-generation stablecoin that offers USD issues on the blockchain. Although the system seems to be challenging, the project provides information that explains how it works and in a very simplified way. In this way, anyone can participate. According to Gregory DiPrisco, the author of the document:

"You're probably familiar with the stablecoins that hold USD in bank accounts and issue blockchain tokens that are" supported "by these dollars. IOU coinbecause if those bank accounts should ever be frozen or if the accountants have defrauded token holders, the stablecoin now becomes an IOU on what is left when they eventually get the bank accounts back (Self they never regain bank accounts). Relying on the legal system to keep cryptographic tokens puts an unreliable intruder into the blockchain. "

The blockchain indicates that there is a million ETHs tied in the platform's smart contracts. However, it should be noted that Dai's market capitalization is about a third of that. The system works by allowing users to group funds and are then issued From tokens. The guarantee behind the tokens is also the guarantee.

Since the platform of the smart contract has received funding and started operations, more than 103 million ETH have been generated. Last year, the Dao producer launched the PETH tokens and these tokens account for approximately one percent of all existing ether. Although some believe that Dai does not have much practical application, there are those who are mobilizing behind as a method to solve complex problems. The platform also has a mechanism that liquidates positions and can lead to a destabilized system.

"There remains the possibility that incentive structures will not work as expected – especially when the price of ETH continues to decline and its value is worth less than the amount of Dai it is supposed to support … In this sub-collateralization situation, the Maker system activates a settlement of the CDP guarantee, automatically selling it to the highest bidders to give it as quickly as possible recapitalize and make sure that the Dai that has released to the original user is completely centralized. "