Maker, a central bank DAO deployed on Ethereum issuing the eDollar (USD pegged) [PROJECT]

[desrever]

Highly Suggested read -> http://ryepdx.com/2016/01/maker-dao/

Maker has a governance token called Makercoin (MKR) which is used for voting on proposals. Voting is weighted based on MKR holdings, which ensures those who are most heavily invested in Maker’s success also have the most say in what it chooses to do.

and

weekly buy-and-burns, in which Maker uses its profits to buy back MKR from MKR holders.

and

The CDP engine helps dai maintain its peg with the IMF‘s Special Drawing Rights.

Flattered by imitation …

[Nagalim]

The buy and burns are regular auctions rather than dual side. They copied what we were, not what we will become, the fools.

[dysconnect]

To be fair it’s copying both us and BTS. At some point they’re also realize liquidity doesn’t come for free, but it would be nice if there’s a competitor that we can learn from…

[crypto_coiner]

Why the Dai is pegged to the Special Drawing Right

[masterOfDisaster]

The explanation why they peg to the SDR is a good read. I like it, because it fits my vision of the Nu network.
But in my opinion they have chosen a questionable design of the peg.

###Note on the Dai’s peg to the SDR
In ending it’s important to note that the Dai will be pegged to the SDR’s exposure (meaning the two assets will have the same day to day volatility), but the long term price of the Dai will NOT be pegged to the SDR, and will instead decouple from the price of the SDR over time at a steady, predictable rate. This is because of how Dai yield is delivered. In the early iteration of the system, which is what is described in the 0.2 version of the Dai Credit System white paper, Dai holders receive explicit yield, i.e. transactions containing more Dai as yield payments. However in the newer versions of the Dai Credit System this feature has been replaced with deflationary yield, i.e. price appreciation. Economically, the yield mechanics remain the same, but the code and blockchain logic for how this yield is delivered are simply different in order to save gas and to avert legal risk (Especially the US is very sensitive towards assets paying yield).

Initially however, the Dai will have a 1 SDR price floor, meaning that 1 Dai can always be exchanged for 1 SDR of liquid assets on the Ethereum blockchain. Over time, due to the deflationary yield, this price floor will slowly increase with the yield. For instance, a 10% yield rate would see the price floor increase to 1.1 SDR over the course of 1 year.

My knowledge about financial policy is limited, but in my opinion designing a deflational currency has two significant drawbacks:

• it’s not stable (that would be true for inflational currencies as well)
• there’s an incentive for keeping the money instead of spending it for it will be worth more tomorrow than it is today and you can pay for more goods and services with it, if you spend later

It’s bad enough, if a currency has to face deflation from time to time.
But it’s totally important what the reasons are; deflation is not necessarily bad.
In the case of the Dai my assessment is: flawed by design.

The success of DAI will depend on the deflation to be small enough.

Trying to peg only to SDR exposure and not to SDR itself is the inferior choice to pegging to SDR directly.
It’s a step into the right direction.
Nu already is (regarding the X-NBT design) a step ahead of DAO.

Nu can offer X-NBT with a track record of providing stable products and 1 X-NBT will, in difference to the Dai, be worth 1 SDR - today, tomorrow, next year.
No need for the customers to calculate!
The Dai is better suited for storing value than for being used as currency.

[Financisto]

Dai seems to work more like a “bond” based on SDR than a stable cryptocurrency.

[masterOfDisaster]

And I found another flaw that is related to

price of the Dai will NOT be pegged to the SDR, and will instead decouple from the price of the SDR over time at a steady, predictable rate

If you really can predict the rate, you can speculate on future interest.
That causes the volatility of the Dai to be bigger than the volatility of the SDR.

If I know, that I can have, say 10% interest annually (the number is intentionally high, not knowing whether it’s realistic, to make the point more clear), people will buy Dai for an uplift of 6%, if other comparable investments offer less than 4% annually.
The next change of key interest rate of one of the currencies, which is in the SDR basket, will show what I mean - assuming that the Dai will have some acceptance, which I doubt.
That effect can only be limited, if the annual deflation is very low.
The success of the Dai might be tied to the percentage of the annual inflation.

If my assessment is right, it’s a bad choice to introduce predictable deflation, especially it turns out to be a high one.

[crypto_coiner]

MakerDAO Marketing Guide

[crypto_coiner]

I was re-reading rune (makerdao leader) reddit post trying to convince ethereum guys that nubits peg break cannot happen on makerdao –
One guy asked the interesting question – how smart contracts will basically prevent the break by being cryptography-enforced AI , supposedly replacing failable humans like in Nu.
His reactions says it all to the chance of success of makerdao, as a business venture…

Dai vs NuBits - Why Maker cannot implode the way Nu did • r/MakerDAO

[Cybnate]

I believe he is right. The challenge is to write a contract what works under all circumstances without human intervention. That won’t be easy right now. Will take a few years before that might be successful. An AI more intelligent than humans may be needed. Not looking forward to it, but probably inevitable.

[crypto_coiner]

I believe he is right.

I think he is not right –
AI has nothing to do with contracts and the blockchain is useful of course only in the conditions of the byzantine generals, which are human agents that do not trust each other basically and are failable.
If we ever have a very strong AI (and not failable) that we can use for payment tx, getting rid of human intervention in the mean time, then the blockchain is absolutely useless and an awful technology, and that might be one reason some google execs are laughing at us right now.