Decentralizing Stablecoin DAI’s Governance
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Global, MakerDAO, Online- Where did this use case occur?
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2021 - ongoing- When did this use case occur?
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MakerDAO- Who were some of the key collaborators
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~95k unique holders of $MKR [1]- How many people participated?
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Blockchain, Currency / Trade- What are some keywords?
What was the problem?
Many projects in decentralized finance try to harness the power of crowds to fully function, both in terms of protocol usage and for decision-making. Gathering a community isn’t easy. Usually, projects experiment with completely novel ways of financing while trying to attract a large number of users.
How does the community approach the problem?
MakerDAO, the decentralized autonomous organization (DAO) behind the stablecoin DAI is one of the first DAOs to launch their governance token called $MKR. Users with $MKR can participate in the on-chain governance that focuses on stabilizing DAI. A single user may have more than one governance token ($MKR).
What were the results?
DAI the stablecoin (which is designed to be of the same value as 1 US Dollar) has been one of the most popular stablecoins in decentralized finance through its governance’s efficient management. One of the most critical decisions facilitated by the governance is related to collateral (a pool of equivalently valued and locked assets that secure DAI’s pricing), in other words, to how the about 5 billion market capped DAI is backed by other cryptocurrencies, including ETH and USDC. Put simply, MakerDAO decides on measures to keep the stablecoin stable.
How participatory was it?
Empower
MakerDAO is fully governed by the DAO’s members that propose, vote on and execute ways to further grow the community.
What makes this Use Case unique?
'The practice of issuing governance tokens has become commonplace, thanks to the pioneering efforts of projects like MakerDAO. While not all governance tokens hold significant value and the voting power of many members may be severely limited, they nonetheless offer an intriguing technological foundation for a novel approach to collective ownership and responsibility.' -Sem