As the popularity of stablecoins grows, one such token reaping big out of it is Maker’s DAI. Apparently, Liquid, a subsidiary digital assets exchange of Quoine, has listed it and effectively allowed traders to trade, buy and sell the stablecoin. A post announcing this latest development revealed this.
DAI, a decentralized ERC-20 stablecoin, is probably the de facto stablecoin given the number of exchanges that have so far listed it. It’s collateralized with Ethereum, the popular native token of the ETH network. And like other stablecoins, DAI token is designed to algorithmically control its value, doing so by controlling its demand and supply.
The algorithm basically creates and burns DAI tokens according to their demand and supply and how that happens is quite fascinating. First, if the price of a DAI token goes beyond $1, holders sell it and earn a profit. Selling them, however, increases the supply of the coins, forcing the algorithm to burn the excess until the price stabilizes at $1.
Consequently, when a DAI token goes below $1, holders use the same tokens to repay debts within the ecosystem. This automatically creates a demand, and a subsequent price increase, which eventually leads to the price stabilizing at $1.
DAI Is An Unregulated Stablecoin, But Liquid is Listing It Nonetheless
Despite its popularity, however, DAI is unregulated. Many of its adherents, however, don’t pay attention to that, and instead like the fact that it features a transparent model. It also has a decentralized governance structure, another reason why many prefer it over common centralized stablecoin, including Tether dollars (USDT).
It is rather surprising that Liquid is listing this stablecoin, a couple of months after throwing shade at the whole idea of stablecoins. In November last year, the exchange published a post, warning crypto traders against over-depending on non-regulated stablecoins.
Quoting from the post, the exchange had stated that any transaction involving “unregulated stablecoins” could turn out to be “extremely dangerous.” It had, therefore, cautioned on getting over-reliant on them, saying that if they were to fail, the effect on the industry could quickly turn catastrophic.
However, the exchange now believes that stablecoins have the potential to be invaluable to crypto investors. This is why, just like anyone else, the exchange has quickly listed them, despite knowing well that they are unregulated.
Preparing to host GRAM Token Sale
Liquid seems to be solidifying its name in the crypto industry. Earlier this month, the exchange announced that it would host the token sale of Telegram’s GRAM tokens. According to the announcement, USD and USDC would be the only ones accepted.
However, it has been revealed that the token sale would be happening on Liquid, even though they will be sold by Gram Asia, the token’s biggest holder. This means that Telegram will be playing no role in the process, but instead leaving everything to Gram Asia.
Speaking about this development, the co-founder and CEO of Liquid, Mike Kayamori, said that the exchange is excited to have Gram Asia as a partner in the token sale. According to him, they both have a vision of achieving a safer and open value transfer system as a way of triggering greater crypto adoption.