Dai Stablecoin is a collateral-backed cryptocurrency whose value is stable relative to the US Dollar
Maker (MKR) is a smart contract platform on Ethereum that backs and stabilizes the value of Dai through a dynamic system of Collateralized Debt Positions (CDPs), autonomous feedback mechanisms, and appropriately incentivized external actors.
Those CDPs allow assets to be locked as collateral to issue new Dai. Dai start with a soft peg ratio 1:1 to USD. Fluctuation of actual ratios trigger a ‘Target Rate Feedback Mechanism (TRFM)’. TRFM uses incentives to issue or hold Dai.
Other mechanics such as ‘Global settlement, Risk Management, and Token Governance, Liquidity Providing are proposed to ensure Dai rate convergence to original 1:1 USD.
Agents in the system include Oracles and Global Settlers who help providing guidance and actual rates for Dai.