Categories: Ethereum

Over 2 Million Ethereum (ETH) Tokens Collateralized in the Maker Dao Credit System

Click here to view original web page at

The Maker Dao ecosystem has been growing steadily over the past few months while Ethereum (ETH) price has tanked, the total debt issued is over $$76 Million in Dai with over 2 Million Ethereum tokens held in collateral.

Maker Dao is the single most valuable dApp on the Ethereum ecosystem and has been successful so far with a decentralized governance structure. With a fairly complicated smart contract system, users are able to borrow dollar pegged Dai tokens with ETH locked in as collateral.

At the time of press, over 2 Million Ethereum (ETH) tokens valued at $217.4 Million are held as collateral to issue $76.448 Million in Dai. That means approximately for every $3 worth ETH is locked in as collateral for every $1 of Dai issued to beat the volatility of ETH.

Image Source:

CDP Creation Doubled in a month

CDP (Collateralised Debt Position) is a smart contract that allows the creation of new Dai tokens with ETH held as collateral. If the price falls below the price levels of the collateral then the position gets liquidated while the user is left with the borrowed Dai tokens.

CDPs are becoming increasingly popular despite the bear market, the total number of CDPs have increased 300% in the last four months on the Maker DAO platform. In the month of January, the number of CDPs created doubled to 1867 from 933 in December.

Image Source:

There are multiple reasons to seek out CDPs.

  1. As a Loan: Just like people borrow money on their houses or gold, one can borrow Dollar pegged Dai with Ethereum as collateral. But the difference is that the process is automated and is riskier due to the volatility of ETH.
  2. Leveraged positions: One can borrow Dai and use it to buy more ETH. For example, let’s say I took 15 ETH and opened a CDP to receive DAI worth 10 ETH. Now if I buy ETH with the borrowed DAI then my exposure now becomes 25 ETH instead of 15, but this obviously comes with the risk of liquidation if the price drops significantly.
  3. Token Arbitrage: let’s say I am long Ethereum, now instead of liquidating my position I can simply borrow Dai and use it to buy other tokens. If the token outperforms ETH then I can sell a portion of it and buy back the ETH hence retaining both the token and ETH exposure.

The Maker DAO ecosystem is governed by the Maker token whose current market cap is a whopping $313 Million making it one of the most valuable ERC 20 tokens.

Get the latest news on Blockchain only on Subscribe to us on Google news and do follow us on Twitter @Blockmanity

Did you like the news you just read? Please leave a feedback to help us serve you better


Illuminati, Mason, Anonymous I'll never tell. I can tell you this, global power is shifting and those who have the new intelligence are working to acquire this new force. You matter naught except to yourself, therefore prepare for the least expected and make your place in the new world order.

Disqus Comments Loading...
Published by

Recent Posts

Terrorists are turning to Bitcoin for funding, and they’re learning fast

Representational image of Bitcoin. (File: Bloomberg) By Nathaniel Popper Hamas, the militant Palestinian group, has been designated a terrorist organization… Read More

4 hours ago

Latest Faketoshi says he conveniently ‘lost the hard drive’ containing billions in Bitcoin

Just yesterday we told you how there was a new Faketoshi in town, staking a questionable claim to the Bitcoin… Read More

4 hours ago

Study Suggests Scarcity Could Drive Bitcoin Prices to $60,000 by May 2020

Share Tweet Send Share Bitcoin price predictions have been coming thick and fast in recent months as the world’s top… Read More

4 hours ago

“Bitcoin will never hit 50k” says crypto skeptic Peter Schiff

For a man that wants nothing to do with Bitcoin , economist and Euro Pacific Capital CEO Peter Schiff never… Read More

4 hours ago

Casa Releases Node Monitor Service to Improve Bitcoin Network Health

Casa, a crypto firm that provides a private key management service and Bitcoin node machine, has unveiled a node monitor… Read More

4 hours ago

ETC/ETH Technical Analysis: Ethereum Classic breaks higher

Ethereum Classic vs Ethereum: Classic is making a comeback today An important price level has been broken 0.037673 looks to… Read More

4 hours ago

This website uses cookies. We use these cookies to collect data about your interaction with our website for the purpose of continuously improving your experience with our site. For more information we encourage you to read our privacy policy.

Read More