The firm stands behind ETH-based stablecoin, Dai (DAI) in addition to it decentralized credit system. Reportedly, DAI is pegged to U.S. dollars, but collateralized by ETH.
DIA users can generate coins by locking up an excess amount of ETH in a smart contract, says Coin Telegraph.
So, if a user wants to access collateral, they have to pay back the DAI debt.
Per the deal, Andreessen Horowitz (through its fund a16zcrypto) acquired 6% of the MKR token supply.
The purchase will allow a16z to manage MKR and the Dai Credit System.
According to a16crypto
There are two sides to the marketplace that allow for the creation and use of Dai.
“Dai is created when asset owners deposit collateral to secure a loan, which is denominated in Dai stablecoin. This loan is called a Collateral Debt Position (CDP). The size of the loan is a function of the USD value of the collateral deposit. Once created, Dai stablecoins can move freely like any other cryptocurrency. People can buy them on exchanges. People can receive them for payment. A secondary holder of Dai need not ever have taken part in — or even understand — the process for creating Dai.
Ordinary users can use Dai stablecoins for payments, savings, or as a base currency for more complex financial products.
These users benefit from the properties of a price-stable cryptocurrency without having to interact with the complexity of Maker’s collateral-credit system.
A set of autonomous smart contracts coordinates and runs the Maker system, which means that anyone with an internet connection and collateral can create Dai without the need for trusted intermediaries. To ensure the system remains solvent, a network of market makers is incentivized to liquidate loans that risk becoming undercollateralized, thereby removing excess Dai from circulation and keeping the balance of Dai to collateral in check.”
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