LibraryCredit and stable value2017Design paperCorpus record
The Dai Stablecoin System
Maker. MakerDAO.
MakerDAO's 2017 description of Dai: a liability minted against overcollateralised vaults, kept near a dollar target by fees, a collateral auction, and an emergency shutdown. It is the reference design for crypto-collateralised stable value, as distinct from a fiat-backed token.
Maker's Dai is a liability minted against collateral locked in a vault, kept near a dollar target by a stability fee, a liquidation auction, and an emergency shutdown that settles to the collateral.
- Evidence
- Primary paper
- Re-measured
- No
- Assumptions
- 4
- Records linked
- 8
Code
Source, repository, and what is actually hosted
- MakerDAO white paperhttps://makerdao.com/whitepaper/
- The source URL is not a GitHub repository. No code remote is invented.
- Full text is not mirrored. Public availability is not a licence to copy the file onto this site.
- Add to a reading list
- Settlement blueprint — collateral, not a promise
01 Claim ledger
What the paper is allowed to say
Each row is a sentence already in the study. The status is the same on every row: a model claim, not a live measurement.
Claim 01 · Paper model
Dai is debt, not a wrapped bank deposit
A user locks collateral, mints Dai up to a ratio, and owes the system. The dollar target is a policy. The asset behind a given Dai is the collateral and the auction, not a named cash account.
Claim 02 · Paper model
The stability fee is monetary policy
It accrues on the debt. Raising it is supposed to reduce minting when Dai is cheap. The paper treats the fee as a tool, which means someone sets it.
Claim 03 · Paper model
Liquidation is an auction
If the collateral value falls through the ratio, the vault is sold to cover the Dai. The auction only works if bidders show up near the oracle price.
Claim 04 · Paper model
Shutdown is part of the design
Emergency shutdown settles the system. Dai holders are supposed to be able to claim collateral. A stablecoin paper that cannot describe its stop condition is less honest than this one.
Claim 05 · Paper model
Oracles and keepers are inside the security model
The paper does not work without a price, and the price is not produced by the vault math. Keepers who bid in auctions are part of solvency.
02 Three cuts
Observation, model, falsifier
A desk does not stop at the summary. Each claim is cut three ways, using only this study's own assumptions and checks. Nothing here is a new figure.
01 Dai is debt, not a wrapped bank deposit
Observation
What the study says
A user locks collateral, mints Dai up to a ratio, and owes the system. The dollar target is a policy. The asset behind a given Dai is the collateral and the auction, not a named cash account.
Model
What has to hold
Debt ceilings and governance delay are set so one collateral cannot swallow the system unnoticed.
02 The stability fee is monetary policy
Observation
What the study says
It accrues on the debt. Raising it is supposed to reduce minting when Dai is cheap. The paper treats the fee as a tool, which means someone sets it.
Model
What has to hold
Auctions complete. A stalled auction during a crash is how a surplus becomes a shortfall.
03 Liquidation is an auction
Observation
What the study says
If the collateral value falls through the ratio, the vault is sold to cover the Dai. The auction only works if bidders show up near the oracle price.
04 Shutdown is part of the design
Observation
What the study says
Emergency shutdown settles the system. Dai holders are supposed to be able to claim collateral. A stablecoin paper that cannot describe its stop condition is less honest than this one.
Model
What has to hold
Debt ceilings and governance delay are set so one collateral cannot swallow the system unnoticed.
05 Oracles and keepers are inside the security model
Observation
What the study says
The paper does not work without a price, and the price is not produced by the vault math. Keepers who bid in auctions are part of solvency.
Falsifier
What would retire it
What do keepers bid in a liquidation, and did that mechanism change after 2020?
03 Sequence
One action, as an operating tape
- 01A user opens a vault, locks an accepted collateral, and draws Dai up to the liquidation ratio.
- 02A stability fee accrues on the drawn amount. The user must repay Dai plus the fee to unlock collateral.
- 03Oracles update the collateral price. If the ratio breaks, the vault is sent to auction.
- 04Keepers bid Dai or the collateral, under the auction rules of the version being cited, to cover the debt.
- 05If governance triggers shutdown, further minting stops and Dai is settled against the remaining collateral at the settlement price.
04 Load-bearing
The argument, and where a pitch drops it
Overcollateralisation is only as good as the sale
The cut
A 150 percent ratio does nothing if the collateral gaps through the oracle and the auction clears far below. The paper's protection is a process: ratio, oracle, auction, penalty. Quote the process, not the adjective.
Why it carries weight
If this cut is skipped, the paper's name is being used without the mechanism that makes the name mean anything.
Where it is dropped
Overcollateralisation only protects the peg while the collateral can be sold for something near the oracle price.
Governance can change the deal
The cut
Fees, ratios, debt ceilings and accepted collateral are parameters. A user who opened a vault under one set can be liquidated under a later set. That power is not an embarrassment added by cynics. It is how the 2017 system steers the peg.
Why it carries weight
If this cut is skipped, the paper's name is being used without the mechanism that makes the name mean anything.
Where it is dropped
Governance parameters can change the risk after a user opened a vault. That power is part of the system, not an embarrassment to be omitted.
Single-collateral and multi-collateral are different papers in practice
The cut
The 2017 story is one collateral and a simpler auction. Multi-collateral Dai adds more oracles, more auction types and more ways to be wrong. Say which one you mean when you say Dai.
Why it carries weight
If this cut is skipped, the paper's name is being used without the mechanism that makes the name mean anything.
Where it is dropped
Overcollateralisation only protects the peg while the collateral can be sold for something near the oracle price.
05 Register
What has to be true
Model · Not re-measured
The oracle price is close enough to a market where keepers can actually sell.
Model · Not re-measured
Auctions complete. A stalled auction during a crash is how a surplus becomes a shortfall.
Network · Not re-measured
Debt ceilings and governance delay are set so one collateral cannot swallow the system unnoticed.
Model · Not re-measured
Shutdown settlement is implementable. A settlement price that cannot be redeemed is a paragraph, not a backstop.
06 Divergence
What happened after the paper
Maker moved from single-collateral Sai to multi-collateral Dai, added new auction mechanics after the March 2020 event, and later added real-world collateral that behaves nothing like ether in a crash. The 2017 paper is still the right anatomy: vault, fee, oracle, auction, shutdown. It is not a description of every later collateral type, and it is not a promise that the peg holds.
A later client, parameter set, or reward formula is a different object. Cite this paper for the mechanism. Cite a primary release for the network. This desk has not re-run the proof.
07 Pre-mortem
What to check before you use the idea
- 0 of 4 marked on this browser. A mark is a reading note, not a pass, a rating, or a recommendation.
08 Anatomy
The paper, in the order a builder needs
The problem it names
A token that simply promises a dollar is a claim on a bank account. A token that is minted when someone locks a volatile asset is a claim on that collateral and on the liquidation process. Maker's paper specifies the second object.
What the design proposes
- A vault locks collateral and mints Dai up to a limit set by a collateralisation ratio.
- A stability fee accrues on the debt. That fee is a monetary tool in the paper, not a service charge hidden in a terms document.
- If collateral value falls through the ratio, the position is liquidated through an auction.
How the mechanism is specified
- Keepers and price oracles are part of the safety system. The paper does not work without a price.
- Emergency shutdown settles the system to collateral. It is the 'stop' the design is willing to name.
- Multi-collateral Dai and later modules extend the 2017 single-collateral story. Name the version.
What this page does not treat as proven
- Overcollateralisation only protects the peg while the collateral can be sold for something near the oracle price.
- Governance parameters can change the risk after a user opened a vault. That power is part of the system, not an embarrassment to be omitted.
- This is not a claim that Dai has held or will hold a peg. Pegs are empirical.
Why the desk still reads it
The studio test for a 'decentralised dollar' is the Maker paper's inventory of moving parts: collateral, ratio, fee, oracle, auction, shutdown. A pitch that has a token and none of those parts is a different, weaker object.
09 Lexicon
Terms, opened into the record
- Vault
- The position that locks collateral and mints Dai. It is a debt, not a deposit account.
- Stability fee
- Interest on the minted Dai, used as a peg tool.
- Liquidation ratio
- The collateral multiple below which the vault is auctioned.
- Emergency shutdown
- The stop that settles Dai against collateral and ends further minting.
10 Repository
Every linked record on this page
Underlined words open a page that already exists: a concept, a protocol profile, a failure record, or another paper. If a word is not underlined, this desk does not have a record for it.
This is Blockchain Lab's reading of a public design paper. It is not the paper, not a copy of it, and not an offer of tokens, equity, custody or a partnership. Later network behaviour can diverge from the text. Nothing here is investment, legal or technical advice.
Research status: Design paper. Last reviewed: 1 October 2026. This is a reading of a public paper, not investment, legal or security advice.