What is the role of real world assets in the MakerDAO protocol?

3 answers

• Raman SharmaJun 16, 2020 · 6 years ago
  Real world assets play a crucial role in the MakerDAO protocol. They are used as collateral to back the issuance of the stablecoin DAI. By providing real world assets as collateral, users can generate DAI tokens, which are pegged to the US dollar. This ensures that DAI maintains its stability and value, as it is backed by tangible assets. The presence of real world assets also adds an extra layer of security to the protocol, as they act as a buffer against market volatility. In the event of a significant drop in the value of the collateral, MakerDAO has mechanisms in place to liquidate the assets and protect the stability of the system. Overall, real world assets provide stability, value, and security to the MakerDAO protocol.
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• Andy AndyNov 15, 2021 · 4 years ago
  Real world assets are like the backbone of the MakerDAO protocol. They give the stablecoin DAI its strength and reliability. When users deposit real world assets as collateral, they are essentially locking up their value to create DAI. This ensures that DAI is always backed by something tangible, making it more trustworthy than other cryptocurrencies that lack such collateral. The presence of real world assets also helps to stabilize the value of DAI, as it is less prone to wild price swings. So, in a nutshell, real world assets provide stability and trust to the MakerDAO protocol.
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• Sylvia HuangDec 16, 2022 · 3 years ago
  In the MakerDAO protocol, real world assets serve as the foundation for the creation of DAI. Users can deposit assets such as cryptocurrencies or even real estate as collateral, which are then used to generate DAI tokens. These tokens can be used for various purposes, including trading, lending, and payments. The use of real world assets as collateral adds an element of stability to the protocol, as they have intrinsic value and are less volatile compared to purely digital assets. This helps to maintain the peg of DAI to the US dollar and ensures its stability in the face of market fluctuations. Real world assets also provide a means for users to access liquidity without having to sell their assets, making the MakerDAO protocol a valuable tool for managing financial needs.
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