Intro to MakerDAO: Stablecoin (Blockgeeks Part 2)

Ameer Rosic

1 year ago
Intro to MakerDAO: Stablecoin (Blockgeeks Part 2)


Welcome to the second part of our Guide on MakerDAO!

Intro to MakerDAO: Stablecoin (Blockgeeks Part 2)

Intro to MakerDAO: Stablecoin (Blockgeeks Part 2)

In the Part 1 we explained to you:

 

 

  • The different kinds of pegs.

 

  • The obstacles that stablecoins face.

 

In this guide, we are going to talk about MakerDAO. However, before we do that, we need to take a look at Tether.

 

Why?

Well, firstly, it happens to be the most widely used stablecoin in the world, and it also happens to be extremely controversial. We feel that this will help provide a helpful contrast for MakerDAO.

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So, let’s get into Tether!

 

What is Tether?

Tether (USDT) is a stablecoin that is Fiat collateralized.

Fiat collateralized stablecoins are the most straightforward way to create a stable currency. A certain amount of fiat currency is deposited as a collateral and coins are issued 1:1 against this fiat money.

Although this method is simple and robust, it requires a central party (custodian) which guarantees the issuance and redeemability of the stablecoin. Regular audits are needed to ensure that the stablecoin is indeed fully collateralized.

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