Collateral and Risk
Learn about risks to the Maker Protocol
MakerDAO enables the generation of Dai, the world’s first unbiased currency and leading decentralized stablecoin. Dai mitigates volatility through an autonomous system of smart contracts called the Maker Protocol.
The Maker Protocol enables users to generate the cryptocurrency Dai, a stablecoin designed to track \$1 USD with low volatility. Dai's stability is managed through a system of carefully crafted incentives.
Collateral can be retrieved upon repayment of the outstanding Dai amount plus an associated Stability Fee.
This architecture poses two pressing concerns:
1. Where does Dai source its value?
2. What compels it to remain pegged to USD?
The answers to these two questions are the focal points of most risk analysis surrounding Dai.