MakerDAO

Manage Maker Vaults and generate the stablecoin DAI

What is MakerDAO

MakerDAO is a decentralized protocol maintained by MKR holders for the purpose of creating a collateralized stable coin DAI. A variety of participants in the ecosystem work to keep the price of DAI equal to 1 USD. Users can also generate DAI by locking up collateral in a Vault and generating DAI.

What is a MakerDAO Vault?

A Vault is a smart contract that holds the collateral deposited into the Maker Protocol. Vaults each have an asset type. For example, an ETH Vault allows one to borrow DAI against ETH collateral. Each Vault has a loan-to-value or LTV, the LTV is the maximum amount of DAI that can be borrowed against the collateral.

If ETH = $1000 and has a LTV of 66%; then one could generate up to $660 DAI

What is the Stability Fee?

DAI generated from a Vault is charged a stability fee until it is paid back. This fee varies among the different vault types. The stability fee is charged as DAI and is applied automatically to the vault as debt.

How do Vault liquidations work?

If the collateral of a Vault falls beneath the collateral ratio, then the vault is liquidated. When a vault has liquidated a portion of the collateral is used to pay the remaining debt and vaults are charged a 13% penalty fee.