The Dominance of Ether in MakerDAO
In the whimsical world of decentralized finance (DeFi), you might think Ether (ETH) is just for trading memes or buying virtual cats. But in the case of MakerDAO, it’s a powerhouse of stability, with a staggering 27% of all ETH locked up in collateralized debt positions (CDPs) belonging to just one address! Talk about having some serious crypto clout. This juicy tidbit was shared by financial technology data firm Digital Assets Data and brought to light through a conversation with Cointelegraph on January 26.
The Birth of Dai
But let’s not get ahead of ourselves. The real question here is: what is Dai? Created by MakerDAO, Dai is a stablecoin that allows users to generate tokens by putting up their cryptocurrency as collateral. Unlike your traditional banking system, there are no reserve currencies backing Dai—no dollars stored under a mattress. Instead, it all hinges on good old Ether locked in a CDP smart contract. Want to generate some Dai? Just stake your Ether and voilà!
From Sai to Dai: A Historical Transformation
Once upon a time (around November 2019, to be exact), Dai hit its initial debt ceiling of 100 million tokens. This was a big moment, leading to the introduction of multi-collateral Dai (MCD). This new toy could be backed by various assets instead of just Ether. The old faithful single-collateral Dai (the one that felt exclusive) was re-branded as “Sai,” while the shiny new MCD took on the name of “Dai.” CDPs? They’ve grown up too, and now we call them “vaults.” So if you’ve got Ether, it’s stored in an Ether vault; have some Basic Attention Tokens (BAT)? You’ll need a BAT vault. How fancy!
MakerDAO’s Ecosystem: Large Players and Their Addresses
Now, here’s where things get interesting. According to our friends at Digital Assets Data, a whopping 155,000 CDPs were opened in the old Maker protocol. Yet, hold on to your hats—77% of those had less than 0.05 ETH. Brandon Anderson, a data science lead at Digital Assets Data, pointed out that while one address holds 27% of CDP value, the new Vaults system has a similar dynamic, with another address holding a notable 15%. Just think about the possibilities—one address could be a smart contract, not an individual. Maybe it’s a group of friends pooling their ETH to rule the cryptocurrency world; we can only speculate!
The State of DeFi: All-Time Highs and Growth
As the DeFi landscape continues to evolve, the total value of assets locked in DeFi applications reached an eye-watering all-time high of 2.7 million ETH—as reported by Cointelegraph back in November 2019. According to DeFiPulse, which is basically the scoreboard for DeFi players, the total value in these applications recently soared to $793.1 million. Out of that total, a jaw-dropping 57% was resting comfortably in the MakerDAO system. So it seems like both large players and individual investors are vying for their piece of this DeFi pie. Who could blame them?
