The Dai Stablecoin System

The problem the paper 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 a venture studio 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.