Category Archives: DAI

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Dai Stablecoin for Economic Stability in Zimbabwe?

  • A plan has been proposed to use the Dai stablecoin to bring financial services to Zimbabweans

Team Toast, the developer of the decentralized and censorship-resistant fiat to crypto gateway DAIHard, has published a ‘blueprint for an economic jailbreak‘ that proposes using the Dai stablecoin as a replacement for Zimbabwe’s native fiat currency, to give Zimbabweans access to a stable currency and financial services.

Zimbabwe has been ravaged by years of hyperinflation, with the native fiat currency losing essentially all of its value over and over again. Citizens have resorted to using other major fiat currencies and cryptocurrencies, but the government has often taken steps to block other currencies in order to try and prop up the native Zimbabwean fiat currency.

Team Toast plans on recruiting a network of ZimDai agents, who are people that are comfortable with using the Dai stablecoin and its associated financial services. These agents would then conduct cash remittances, local transfers, international transfers, and would teach other people how to use Dai. Essentially, ZimDai agents would provide financial services similar to a bank. The Dai stablecoin is optimal for this since it is pegged to the USD, which is the most stable currency in the world but also is decentralized and censorship-resistant.

It remains to be seen if this plan will become widely adopted in Zimbabwe. In any case, it is a seemingly effective method of handling hyperinflation, and could be applied in many different countries where hyperinflation is a problem.

 

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MakerDAO to Accept Select ERC-20 Tokens as Loan Collateral

MakerDAO has announced that they will begin accepting select ERC-20 tokens as collateral when taking out Dai loans, unlike the current setup where Ethereum is the only accepted collateral. The first six ERC-20 tokens that could possibly be used as collateral are Augur (REP), Basic Attention Token (BAT), DigixDAO (DGD), Golem (GNT), OmiseGo (OMG), and 0x (ZRX). BAT is likely the first ERC-20 token to be approved.

MakerDAO is a decentralized borrowing and stable coin system, where borrowers deposit cryptocurrency as collateral and receive the Dai stable coin which is pegged 1:1 with the USD. MakerDAO adjusts interest rates, much like a central bank, in order to keep Dai’s value balanced. Dai and MakerDAO have seen growing popularity, with Dai having a circulating supply in excess of USD 100 million, and Maker (MKR) having a market cap near USD 670 million.

In the old system, MKR was used to pay stability fees, which is essentially the same as an interest rate, but now Dai will be used to pay the stability fee.

Users who hold the old single collateral version of Dai, now called Sai, will be able to upgrade to the multi-collateral version, which is called Dai, via the migration app. Users who hold Sai on Coinbase will have their coins automatically upgraded to the new multi-collateral Dai.

Finally, one of the most anticipated changes in the MakerDAO system is that users who hold Dai will be able to earn interest simply by holding their coins. The interest payments will be funded with the stability fee.

 

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Stablecoins Used by Nearly All Market Participants

Stablecoins Are Used by Nearly All Market Participant

Even though cryptocurrency is touted to be more efficient than legacy currency systems, it appears most cryptocurrency traders can’t help but peg their trust to fiat or its digital look-alike. This assumption holds true as a report by Binance Research indicated nearly all market participants use stablecoins.

Stablecoins are best known for their hedge against volatility in the cryptocurrency markets and though in a few cases are used as a medium of exchange, their most widely adopted use case is in a crypto-to-stablecoin trade environment. The level of adoption, however, especially the most used types – stablecoins backed by fiat – do reveal the strong industry ties to fiat systems.

According to Binance Research, while sampling its institutional and VIP clients, it observed that “90% of the clients use USD as the benchmark currency”, which further supports their initial theory on the adoption potential of stablecoins backed by USD. The report further suggested “USD stablecoins and USD-denominated platforms are the leading forces of the cryptocurrency and digital asset industry”.

As a correlation between the level of adoption of stablecoins and fiat-dependence, a subtle observation pointed out in the research indicated a large number of the respondents had prior experience in the financial industry exclusive of the digital asset industry. At the time of the study, more than half of the market participants sampled, either had one foot in the equity market or the foreign exchange market, which evidently supports the gravitation towards fiat-dependency.

Comparatively, the traditional financial market has well-established hedging strategies in the form of offsetting stock positions, options, futures, and bonds, to reduce exposure to market risks. On the other hand, while the cryptocurrency industry may have mirrored a few of these market derivatives – which for the most part are largely accessible by large investors and those rather conversant with the financial market principles, adoption of fiat-backed stablecoins by all class of investors has been somewhat sporadic with USDT taking the lead.

Circulating Supply of stablecoins since June 8th:

GUSD: -16 million
PAX: -36 million
TUSD: -42 million
USDC: +20 million
Tether: +280 million

🤔

— Giancarlo The Tether Whisperer (@CasPiancey) June 27, 2019

With respect to the recent bull-run which dazed many in the industry, as flagship cryptocurrency Bitcoin touched new highs in over 16 months, some have opined that the mysterious uptrend may not have been without the help and from an uptick in the recent interest stablecoins.

The renewed interest in the bull-market of crypto may seem a mystery to some, but perhaps it had to do with the catalyst brought by Libra, Paxos, and other stablecoins in the market!

— Paxos (@PaxosGlobal) July 2, 2019

Adoption of other types of stablecoins – those backed by commodities and by other forms of cryptocurrencies, don’t seem like the go-to-choice for investors in times of strong market movements. As a matter of fact, a recent report indicated only 30% of all stablecoins are currently operational, with the demise of a majority resembling cryptocurrency pegged to physical commodities such as gold and other precious metals.

 

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Stablecoin Offers Way Out for Argentinians as Peso Struggles

Stablecoin Offers Way Out for Argentinians as Peso Struggles

After another economic crisis in Argentina, characterized by the peso’s falling to a record low against the US dollar, some financial analysts and commentators in the region see cryptocurrency as a potential solution.

After a history of inflation and debt defaults by the government, Argentina’s population see banks as a risk with some savers even keeping pesos in cash at home rather than deposit funds with a bank. Cryptocurrency has become more noticeable these days, particularly in the country’s capital Buenos Aires, where blockchain projects are thriving, unhindered by a government which is currently tolerant of the new technology.

It has been suggested that a cryptocurrency stablecoin may be a viable alternative to a struggling peso at some point if the current downturn in the economy kicks in with more vehemence. It could be that the mechanism already exists for creating a stablecoin with companies such as Ripio already adding its own to Dai coin to its exchange and wallet.

Developed by a foundation called MakerDAO, Dai is pegged to the dollar by using smart contracts on the Ethereum blockchain and is also currently being offered by another Argentinian exchange Beinbit. A few other exchanges in the region also offer Dai, the most notable of which is Buenbit. Ripio now has 300,000 users in Argentina, Brazil, and Mexico.

Nadia Alvarez MakerDAO’s business development associate for Latin America suggests that a change of perception by Argentinians needs to take place before a stablecoin could become an effective alternative to the national currency.

“One big problem that we have now is that all the crypto solutions have been for the crypto-nerds, for the techie people,” she said, adding that a stablecoin could offer the advantage of being “totally understandable” to users, rather than a cryptocurrency which fluctuates in value, as does country’s current fiat, the struggling peso.

 

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UNICEF Continues Crypto Advocacy, Now Accepts DAI

UNICEF Continues Crypto Advocacy, Now Accepts DAI

The United Nations International Children’s Emergency Fund (UNICEF) France has announced that it is now accepting donations in the DAI cryptocurrency. This makes it the 10th cryptocurrency it now accepts for charitable donations.

The organization seems to think that “open source explorations of blockchain” can be funded using the DAI. The latest cryptocurrency is MakerDAO’s stablecoin pegged to the USD. The funds to be collected through this channel is to be used to support open source projects through “bounties” and “funding research” for blockchain-related projects which ultimately aims at helping the “world’s most vulnerable people”.

UNICEF’s Ventures Fund invests in “frontier technologies” and how they could be used to solve “humanity’s greatest challenges” It currently considers the emergence of blockchain technology as “new systems of trust and exchange on which users can send value directly from one party to another without the need for intermediaries”.

Etherscan.io reveals that the DAI wallet address is about 12 days old and a few contributions totaling DAI 116.2 (about USD 116.7) at press time have been made with the latest contribution being two days old.

The UNICEF organization in France began accepting cryptocurrency donations in 2018 to facilitate the link between emerging technology and charitable causes.

The adoption pattern for cryptocurrencies as both a store and exchange of value may not happen as sporadically as most people expect. However, with reputable industries considering blockchain as alternate means to crowdfund leveraging on the perks of decentralization and trustlessness, the current pace is a steady and evolving transition.

With the likes of UNICEF, blockchain has once again been taken outside the confines of the fintech niche and brought into the regular day-to-day affairs of those who would one day be adopters of this looming technological revolution.

Trusting a developing multi-billion-dollar market, UNICEF sure sees the new technology as an opportunity do much more than virtual trading and speculative analysis. Director of UNICEF France Sébastien Lyon stated in the past: “Cryptocurrency and blockchain technology used for charitable purposes offers a new opportunity to appeal to the generosity of the public and continue to develop our operations with children in the countries of intervention.”

Prior to this news, other developments made by UNICEF around the blockchain industry included the addition of nine popular digital currencies to its website donation portal and a USD 100,000 funding across six blockchain startups.

Other companies are contributing their quota to extend charity through blockchain initiatives. Binance Charity Foundation (BFS) is another active portal that seeks the furtherance of UN Sustainable Development Goals (SDGs).

 

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