by the Maker Team | Dec. 2017
This paper argues that traditional cryptocurrencies such as Bitcoin and Ethereum are too volatile for day-to-day transactions, necessitating a stable currency relative to the US dollar. Maker intends to solve this by creating a token, Dai, which will be collateralized by debt and kept at a stable value (relative to USD) through a variety of pricing mechanisms. Finally, the authors discuss governance and present possible risks and mitigation measures.
The Dai Stablecoin System was designed to solve the crucial problem of stable exchange of value in the Ethereum ecosystem and the wider blockchain economy. We believe that the mechanism through which Dai is created, transacted, and retired, along with the direct Risk Management role of MKR holders, will allow for self-interested Keepers to maintain the price stability of Dai over time in an efficient manner. The founders of the Maker community have established a prudent governance roadmap that is appropriate for the needs of agile development in the short term, but also coherent with the ideals of decentralization over time. The development roadmap is aggressive and focused on widespread adoption of Dai in a responsible fashion.