Cryptocurrencies have faced a significant downturn in 2023, with Bitcoin plummeting over 45% from January to March 30 – marking its worst Q1 performance in history. As market capitalization evaporated by $114.9 billion, stablecoins like Dai may present new opportunities during this bear market.
At the Golem & MakerDAO Beijing meetup hosted at Kr Space on March 31, MakerDAO Economic Researcher and China Community Lead Pan Chao shared insights about the Maker platform and its stablecoin Dai with 36Kr.
Understanding MakerDAO and Dai
Maker represents one of Ethereum's earliest decentralized autonomous organizations (DAOs) and smart contract systems. The platform offers Dai, a stablecoin pegged 1:1 with the US dollar and backed by digital asset collateral. As a member of the Ethereum Community Foundation, MakerDAO maintains strong ties to the broader blockchain ecosystem.
From Speculation to Utility: Dai's Role as Payment Infrastructure
The recent cryptocurrency market crash highlights the extreme volatility preventing mainstream adoption. Pan Chao explained: "Bitcoin and Ethereum aren't primarily used as daily transaction media – they carry speculative characteristics. Being deflationary assets, people prefer hoarding them rather than circulating them as currency."
Unlike speculative assets, Dai achieves stability through:
- Collateralized Debt Positions (CDPs)
- Ethereum-backed "guaranteed hard currency"
- Multiple functions including value storage and leveraged trading
Dai's primary competitor is USDT (Tether), which also maintains a 1:1 dollar peg. However, January 2023 reports revealed concerns about USDT's overissuance. The key difference? Dai's collateral exists as actual assets on Ethereum through decentralized smart contracts – demonstrated by maintaining its $1 peg during recent market turbulence.
"Dai operates through user-system spontaneous behavior," Pan noted. "Its supply responds to market demand rather than centralized control, eliminating institutional risk."
Real-World Dai Applications
Several exchanges already utilize Dai as base pricing currency:
- Traditional exchanges (Bibox)
- Decentralized exchanges (ERCdex, etc.)
MakerDAO has partnered with:
- International remittance companies for Dai transfers (speed depends on Ethereum network)
- Supply chain finance firms replacing volatile cryptocurrencies with Dai payments
"The bear market reminds us that blockchain needs real applications beyond speculation," Pan emphasized. "Stablecoins like Dai serve as foundational infrastructure. During crashes, users and exchanges need decentralized, transparent safe-haven options."
DAICO: The Next-Generation Fundraising Model
With approximately 81% of ICOs identified as scams (per Satis Group LLC), and global regulators cracking down, DAICO emerges as a promising alternative.
How DAICO Works
Ethereum founder Vitalik Buterin proposed this hybrid model (DAO + ICO) in January 2023. It enables:
- Smart contract-controlled fund releases
- Investor-adjustable monthly developer withdrawals
- Capital return mechanisms for failed projects
"Using volatile ETH for fundraising creates conflicts," Pan explained. "If Ethereum's value rises 3-4x, investors might withdraw funds prematurely. Stablecoins like Dai solve this."
While still nascent, platforms like TheAbyss (February 2023) now specialize in DAICO implementations.
FAQ: Understanding Dai and DAICO
Q: How does Dai maintain its dollar peg?
A: Through overcollateralized CDPs and autonomous feedback mechanisms adjusting supply based on market demand.
Q: Can Dai replace traditional banking systems?
A: 👉 Discover how Dai enables borderless financial infrastructure without relying on centralized institutions.
Q: What advantages does DAICO offer over ICOs?
A: Investor-controlled fund disbursement and built-in accountability mechanisms prevent common ICO scams.
Q: Where can I use Dai today?
A: Various exchanges, remittance services, and 👉 emerging DeFi applications support Dai transactions.
Q: How does MakerDAO govern the Dai system?
A: Through decentralized voting by MKR token holders adjusting risk parameters and collateral types.
Q: Is DAICO legally compliant?
A: While innovative, projects must still navigate local securities regulations when implementing DAICO models.
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