Decentralized cryptocurrency DAI, the rate of which is pegged to the dollar, was launched in the main Ethereum blockchain 17 Dec 2017. In less than two months decentralized mechanisms ensure the stability of the DAI has been twice tested, and if the fall of the ETH on 17 January can be described as «got off lightly», the collapse of 7 February, when the rate of live per day fell by almost two times to $578, was a real test for the system.
Many secured positions CDP came under compulsory liquidation simply because their owners did not have just minutes to replenish the amount of mortgages or to cover the debt system in DAI. Thus, the largest pool in all of CDP No. 61 of almost 12% of all PETH in the pool was one step away from liquidation when the pledge at some point, only 11% exceeded the threshold of liquidation. At the initial stage of operation of the system 5000 ETH auctioned for DAI, it could destroy the mechanism stalmine due to low market liquidity. Fortunately, the owner of the CDP was time to replenish the Deposit.
The lesson was useful – at the end of the hurricane survivors have become more attentive to my CDP and now the schedule for a possible forced liquidations depending on the rate of ether seems to be more stable.
The events of 7 February have added to the team Maker of confidence, which resulted in the announcement of the increase the upper limit of the emission DAI 2 times, up to $100 million. The volume issued by DAI as of February 10, is nearly $14 million.
Meanwhile, Reddit users begin to share stories about how they use DAI emitted from CDP. Contrary to the expectations of a team that believed that the lion’s share of users of the system will consist of cryptocurrency traders, is that most applications are loans in DAI bail ETH to pay for daily needs – users are able to find the rate of 0.5% per annum is quite attractive. Of course, this cannot be considered a trend since it is largely experimental stage of system operation, users are quite knowledgeable people, and this can easily be seen by looking at their profiles in Reddit.
What to do with DAI – user stories
The project developer Distict0x (/u/misterpeej): you had to buy the car, but could not be addressed for the following reasons:
My credit rating is below 700, so that the loan rate would not be small.
I don’t need «any» car I knew what I wanted, and was willing to wait for the right option.
I didn’t want to waste your ETH to buy a car (stupid in fact).
As a result, instead of having to go to the Bank voluntarily agreeing to the robbery, I just created a CDP with ETH, changed received DAI for USD and bought the car for cash. So now I am the happy owner of a BMW 335i Sport Sedan and I’m thinking to buy «THX DAI».
A user with the nickname MrStormLars: I had to buy ETH $10, so in any case won. I believe that ETH will continue to grow, so was not them to spend, and has created a CDP. Besides, adventures in kryptomere for my wife from irrelevant theory to become reality, so here is a win.
Mysterious purchase of the mobile counter for sale coffee
The user Ernmkr: [I] got out of his CDP $4000 and bought a coffee cart! Just needed. Maybe will be able to take DAI as payment for the coffee..
Story from /u/latetot. I was hanging loan for the car at the rate of 4%. If I just sold ETH for payment, I would receive more taxes on capital gains (capital gain tax). And since the creation of the CDP and receive from it are DAI loan, I just lowered the mortgage payments up to 0.5% (Commission of stability in the CDP)
/u/klugez: I opened a CDP, and received DAI bought another ETH. In General, the idea of obtaining a loan from the blockchain so far seems fantastic.
/u/song_of_the_free: I opened a CDP received DAI converted into ETH, and they, in turn, invested in several projects Ethereum that I trust. I like to get loans from the «decentralized Bank» for a few cents. Besides, I just wanted to play with the smart contract.
The first conclusions
It is seen that for US citizens, forming a huge potential market, a strong incentive is the fact that DAI received as a loan from CDP, and converted to USD, in contrast to the simple exchange of cryptocurrency for Fiat money, are not taxable event.
While the final economic benefits from such operations is not obvious, because since the beginning of operation of the system in less than two months, but with a high probability, before reaching the upper limit of the DAI capitalization of $100 million, the issue will be clarified, as well as new applications of DAI and CDP. Well, two unexpected jump rate while only confirm the efficiency of the decentralized mechanisms of the binding of cryptocurrency to the value of Fiat, without having relation to traditional banks, which demonstrates the continuing story of the Tether, can be quite risky.