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Investing in stablecoins? Loaning cryptocurrencies? Making (MKR) it possible.

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Stablecoins were, probably, the most hyped cryptocurrency class of the year. Potentially, they can increase cryptos market usability, serve as a cryptographic and more secure alternative to fiat money and are already basically unanimous in every exchange as middlecurrencies.

Currencies tend to lose their value over time. Investing in a stablecoin pegged to the USD would be pretty similar, thus, to invest in the dollar, which is generally a bad investment, except if you manage to trade them with a small premium instead of a small discount over their par, the latter being much more usual (and you’ll rarely be able to buy a significant amount of them when they are below their par value). There’s also the general mistrust about whether their claimed collateral reserves are true or not. If they cannot prove they possess enough collateral to back their circulation, then they’re not far from a Ponzi scheme which can eventually cause some trouble for their users. Well, in the case of Tether (USDT), there has already been a copious amount of trouble. They still didn’t provide us with a third-party audit for their reserves and, on top of that, there is enough evidence to affirm it was used to manipulate Bitcoin’s price causing its value to skyrocket and then fall at the same pace. Paxos (PAX) and TrueUSD (TUSDT) are two dollar-backed exceptions, providing regular and legitimate audits consistently.

Besides being useful currencies for their given purposes, there are some concerns surrounding the fact that they only work because they rely on regulation. Some worry that these regulations are subjected to the authorities’ scrutiny, which can change at any time, others simply don’t like the idea of mixing cryptocurrencies with the government.

The Maker Platform is an algorithmic stablecoin, not a fiat-backed one, making it an answer to all these issues.

First of all, Maker is one of those “dual token” platforms. The tokens have very different functions but brilliantly complement each other. There is DAI, the stablecoin, kept at $1. Differently from other cryptos that do the same, DAI is not backed by a regulated asset and still, it won’t ever significantly fluctuate even under extreme circumstances, which they have a special mechanism for. It’s back by Ether (ETH). DAIs can be borrowed using Ether as a collateral. Maker issues Collateralized Debt Positions (CDPs), allowing users to lock a certain amount of Ether to loan DAIs. The loan can be paid at any time, unlocking the user’s Ethers and burning the DAIs.

The amount of DAI borrowed is equivalent to the current ETH market price, as 1 DAI is expected to be equal to 1 USD. If the price of Ether happens to appreciate, the user doesn’t need to pay any more than what they borrowed to unlock their ETH. That’s the magic of CDPs: if the price of ETH happens to appreciate, you can settle your loan paying less than the current ETH’s price.
In case the Ether price goes down making the collateral of the CDP to go below a certain threshold, the CDPs are automatically liquidated before there’s insufficient Ether to back for the DAIs. Maker then sells the collateralized Ether to buy enough DAI to pay for the loan. At this point, the borrower wouldn’t have lost anything more than what he would if he just held the Ether (except, well, a liquidation fee and the CDP fee).

Considering the Ether price can crash too fast reaching a value which isn’t enough to back for the CDPs’ DAI, MKR comes into play. In this case, more MKR is issued and sold in the open market to raise the necessary funds to back for DAI. MKR holders are responsible for the governance of the Maker ecosystem, setting parameters such as collateralization rate and liquidation threshold.

They receive the CDP fees in return. As more MKR is created and sold, it’s natural that the token’s price will drop, incentivizing the voters to intelligently regulate the system.

Maker presents a last resource process that basically resets the system, called the “global settlement”. A select number of governors can trigger the global settlement, allowing DAI holders to claim ETH at par value. Although it sounds a harsh movement, it’s Maker’s solution to extreme theoretical situations in which its vulnerability can be exploited.

DAI and MKR’s current market status

Dai
As we can see by this graph, Dai tends to fluctuate by no more than 0.05%, with some rare slips of up to 5%, which doesn’t make it less of a stablecoin, albeit revealing a volatility higher than other common stablecoins’, like Tether and TrueUSD.


source: coinmarketcap.com

MKR


source: coinmarketcap.com

Maker is a solid cryptocurrency, ranked as 24th in market capitalization. Its price tends to be comparatively unpredictable, as it’s not only determined by demand, but by bad governance from the holders. But trading is not the only way to profit from MKR. Taking part in Maker’s regulation is also a way of earning income from it, and it only requires you to hold a few tokens to vote and receive a share of CDPs’ fees.

Conclusion

Although there are already many stablecoins in the market, Maker achieves stability in a different and smart way.

DAI loans are allowing people to buy things they need at the moment without selling an asset they see the potential to grow in the future, and with CDPs, there’s nothing really to lose except a small tax.

There’s certainly a place for a stablecoin like DAI alongside fiat-backed ones that provide sufficient evidence of their reserves to match Maker’s algorithm that dispenses it from audits.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.

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Altcoins

Encrypgen’s New HODLING Incentive Program May Send DNA Token Soaring

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Cryptocurrency traders have enjoyed a Bitcoin moon shot during the past few months.  Those gains have created a much more enjoyable environment for crypto bulls.  Whether it’s a temporary or permanent increase remains to be seen but hitting the 10,000 level has put everyone in a better mood.  Unfortunately, altcoins have not had experienced the same type of gains and are lagging significantly behind Bitcoin.

I’ve written articles in the past year that there is at least a decent chance that many altcoins won’t survive the current environment.  The ones that do will do so because they created a platform that has real world usage.  After spending countless hours researching many of the existing altcoins, I’ve yet to see a company that is more promising than Encrypgen (DNA).

Encrypgen Background Information

Encrypgen is a genomic blockchain network that provides customers and partners with best-in-class, next generation, blockchain security for protecting, sharing and re-marketing genomic data. This creates a fair marketplace for a person’s DNA that can be stored privately and sold (if a person wishes to do that). A person’s DNA can also be shared privately and securely with their physician for their personalized care.

Typically, people can send their DNA off to a lab to find out who they are and where they come from. As fun as that might sound, there is a significant security problem…

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Top 3 Coins to Buy Before They Go Big

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Crypto bulls are back, that much is clear. The long-lasting, harsh crypto winter is gone, and the new era in digital currency sector opens up some rather interesting opportunities. With many more bull runs expected to come in months ahead, a lot of coins are likely to blow up and maybe even hit new all-time highs, although that still remains purely theoretical.

On the other hand, the fact is that numerous coins are seeing prices that were not achieved since early 2018, and the overall momentum remains bullish. With that in mind, even if new records do not come for a very long time — chances are that many of the coins will blow up enough for investors to see some serious gains in months to come. As a result, investing in some of these coins now might be a very profitable decision, for those who have the patience to wait a few months. Here are some of the projects believed to have the greatest potential to go big in the second half of 2019 and beyond.

1. TRON (TRX)

Putting TRON on the list should not really surprise anyone, as the project constantly comes up with new project updates, partnerships, and alike. It also constantly breaks records, as is becoming one of the biggest players in the dApp and smart contract development sector.

In the past few…

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TRON (TRX) Is Likely to Go Big in June

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We are now halfway through 2019, and the situation in the crypto space is better than ever in the past year. Numerous cryptos are seeing large gains, often cut by brief periods of stagnation or small corrections, but the overall sentiment is obviously bullish.

Bitcoin sits way above the $8k mark, and while it struggles to go beyond $8,700, it is still trying to grow. Investors and analysts are quite bullish regarding the foreseeable future, and a lot of altcoins are expected to follow BTC in this regard. However, today, we would like to talk about one particular altcoin — TRON (TRX) — as well as why it is likely to go big in June.

TRON’s progress so far

As many people in and out of TRON community know, TRX is not a project that often sits still. It is rich with announcements, particularly when it comes to his CEO, Justin Sun, whose enthusiastic tweets often seem like hype building to many.

However, TRON made some massive progress in 2018, which was the worst year cryptocurrencies have ever seen. This is not something that can be achieved through hype alone, and the project needs to have true quality and value in order to see such massive development in the middle of the longest and harshest crypto winter in…

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