MakerDAO’s DAI Stablecoin Now Available on Coinbase’s Retail based Crypto Exchange
If you ever wanted to use the DAI stablecoin and you have a Coinbase account, you will be happy this week. Coinbase has recently affirmed that its retail customers will be able to finally invest in the DAI stablecoin. However, traders who live in New York will still not be able to it because the local legislation is trickier.
While the company provided no explanation for why the token will not be readily available in New York, it is easy to speculate why. The local Department of Financial Services (NYDFS) has a lot of power in the state and it has to approve all tokens before they are properly listed on exchanges.
All desktop, Android and iOS apps will support the new token and the clients of the company will be able to buy, sell, receive, send and store these tokens now. The currency will run on top of the Ethereum blockchain, as you may know, if you are familiar with the DAI ecosystem.
About DAI And The MakerDAO Ecosystem
According to Coinbase, DAI is a decentralized stablecoin which has a price of around a dollar. It is not a centralized coin, however, and it is backed by collateral on its platform. Basically, the token is a part of the MakerDAO ecosystem.
This ecosystem has both DAI and MKR tokens and a community which maintains the stability of the tokens, which can be earned by getting loans. DAI is the decentralized stablecoin while MKR is the governance tokens, which are used to vote on the decisions made on the platform.
Unlike other stablecoins such as the Paxos Standard (PAX), USD Coin (USDC), True USD (TUSD) or the Gemini Dollar (GUSD), which are backed 1:1 by USD holdings, DAI uses a very intricate system in order to maintain its peg. However, the system has faced some trouble recently. Not quite the trouble that stablecoin Tether (USDT) has faced though.
In order to keep the tokens stable, the holders of the MKR tokens have voted to increase the fees of the system several times this year. This is the so-called stability fee, which is used in order to ensure that the DAI token never loses the peg, as the tokens are burned after they are paid, which diminish the number of tokens in the ecosystem.
The action had to be done as DAI was trading at lower prices in over the counter markets, but now the problem has been solved by the moment and the prices are somewhat stable again. The idea is that a higher stability fee will incentivize the people borrowing the money to give it back sooner, which will diminish the tokens.
At the time of this report, the fees are at 19.5%.
DAI is launching at https://t.co/iQARfimGvY and in the iOS and Android apps within the next 15 minutes. You may need to update your app to properly buy, sell, convert, send, receive, or store DAI. We will update when DAI is fully live. https://t.co/Uc74NHT3GH
— Coinbase (@coinbase) May 23, 2019