Loans on the blockchain: how does the Maker and why do we need stablon DAI?

Imagine you could invest all your money in Bitcoin in 2011 or invest a few thousand dollars in Ethereum at the start of the project. The history of the hundreds of x’s inspire investors to huge deposits in the crypts. But what if in addition to investing you have other expenses? You can now spend money without selling their coins — enough to service Maker.

The contents

What is a CDP?

Collateralized Debt Position (CDP) is secured a trade position, financial concept, which began to gain popularity in 2014. CDP is the project Maker DAO. The main purpose Maker — to minimize the volatility of the stock market with your own stablon DAI. Thanks to the technical possibilities of the blockchain now the whole algorithm open a CDP can be organized on a decentralized basis.

How to use this?

CDP allows you to lock your own scriptactive — Ethereum — storage services and to get a loan in the amount of 66 percent of the DAI (DAI 1 = 1 USD). To return the funds at any time by paying the amount taken DAI.

Source: crypviz

Example:

  • block 10 ETH in storage CDP. At the time Locke price Ethereum is around $ 400 (total $ 4,000 blocked);
  • take a loan in the DAI value in the equivalent 6 ETH (2640 DAI);
  • paid back taken 2640 DAI at any time received on your Deposit previously blocked coins Ethereum. Ideally, during this time, the price of cryptocurrency grows up and you get a profit of ETH.

That’s what “magic” the CDP now you can spend a certain part of the sum of its scriptactive and preserve them.

Another example with a screenshot.

Source: crypviz

Received DAI can also be used for reinvestment in the CDP. However, in this case, the investor becomes more dependent on price behavior Ethereum.

And if the price of ETH will fall?

For this case, the Maker procedure of elimination. If the price of Ethereum will drop lower than 150 percent of the cost while the lock of the coin, your CDP will be vulnerable to elimination. By the way, the elimination is another mechanism to ensure DAI, in addition to burning tokens.

Source: crypviz

Get out of the situation is quite simple — enough to pay their loan or to increase the position.

How to create your own CDP?

The service interface to the CDP is extremely simple. We recommend you to view the guide in video format for open positions. More details work with the Maker will reveal later.

Safety first

As in trading, the loans require from the investor the utmost of care. CDP is designed for those who clearly understands all the intricacies of the Maker and is ready to bear full responsibility for the safety of their funds.

We recommend you to open a secured debt position of a maximum of 10 percent of their funds. His impressions of the Maker, you can share in our cryptodata.

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