I tried to shill you on MakerDAO / CDP's since February. I couldn't be any more financially comfortable since.
Money went towards several investments which are now producing $. All without having to sell a single of my ETH. Still gaining $ here and leveraging myself.
If there is one single thing in Crypto to learn and understand, let it be MakerDAO Afterwards go learn everything you can about Augur. And no bear cycle will ever bother you
Will makerDAO begin accepting other tokens such as 0xBTC?
Ethan James
soon™, they will accept DGX first (1gr gold stabletoken). I figure MKR and DGD too. Not sure about 0xBTC but I would be surprised if in the long term they won't be supporting a wide array of other ERC-20 tokens.
THe thing is however, none of these stabletokens are ever stable unless they do it the Finex way of having bots trading it against eachother
Levi Reyes
Also won't fiat intergration, which is certain to come in the upcoming years completely wipe the purpose of stabletokens? Maybe DGX will survive because of its gold appeal.
Joseph Russell
This is true, but users (like me) do have incentives to keep DAI stable. I use a market maker bot to take the DAI spread difference between DEX's. Right now its no longer as profitable as it was months ago, but it does add to stability of DAI
> wipe the purpose of stabletokens?
You can have fiat pairs, but unless you also tokenize them you cannot use them on DEX's or within smart contracts. Stablecoins are necessary. DAI, Tether and TUSD are both good examples here. However, we know the risk Tether carries, other stable assets unfortunately are not less riskier. But the idea works, and nothing has gone fatally wrong so far.
Because it is a governance token? The token itself does have value and could potentially be collateralized. You can already enter a long or short position on MKR if you'd know how to create a market on Augur. Sky is the limit here, I see little reason as to why they would be limiting themselves in the long run. Maybe MKR won't be added, but that thought is far from nonsensical.
Luis Carter
> I just sold MKR and bought FOMO3D when the threads starting popping up and made $2000 so far > Got loans on some ETH on Sunday, with DAI and exchanges ending up buying coinbase pump > Sold on Tuesday, paid back CDP loan, have some dust of MKR for payment also, made $2600
I did this off 5 ETH and few MKR (which I didn't really need). As far as money risked and money made, this has to be my most profitable week ever. Plan on buying back MKR. The biggest thing that is bad about it and I only want a tiny tiny position is that 95% of it is held by top 100 addresses. They never even had an ICO. You have a handful of guys that basically own every MKR out there and I'd get fucked if someone decided to dump
MKR is within the top 3 most centralized tokens by holdings. As I did in February, I would not advise anyone to stockpile the MKR token. You only need it to wipe off your DAI debt. Although I have a huge DAI debt of several yearly salaries in my country, I only hold about 0.5 MKR. Here, you actively want to use the MakerDAO system. Which you're doing! gj
Pareto distribution strikes again. Honestly don't know. Didn't bother to research it any further.
Grayson Foster
So far what I have bought with my CDP loan:
> 2x Bitmain Z9's. > 1 ZenCash supernode > Leveraged at 30+ ETH since FEB. > 3 Electric Scooters for a business (getting monthly payments). > Several replica watches from China which I am flipping locally at few hundred $ profit each.
(using profits to pay off my DAI debt).
user, get in on this. Crypto hustlin' at its core.
Gonna sage this thread all day in an effort to get more people on MakerDAO. AMA, not a whale, but Crypto cash flow rich because of this genius contract.
MKR will never be added because it's the emergency collateral pool. It defeats the purpose to have it as both primary and backup collateral. They never had an ICO but they always had sell orders up on their decentralised exchange. You could buy at any time. The distribution is concentrated for a few reasons: 1) They had a token upgrade, many tokens are still held by the changer contract waiting to be redeemed 2) The dev fund still holds ~40% of the MKR 3) They made deals with venture capital firms for huge chunks of tokens. Plenty of small fry like me own MKR. It's my second largest holding after ETH.
Nathan Clark
>other tokens yes >such as 0xBTC lol no
Luke Johnson
> MKR will never be added because it's the emergency collateral pool. It defeats the purpose to have it as both primary and backup collateral.
Could you elaborate on this? You mean as emergency collateral for global settlement? Isn't the DAI supply backed? As much I use MakerDAO I haven't spend much time researching the token.
Carter Hall
The MKR token is the last resort collateral. In the event that a CDP loses value faster than it can be settled, MKR is minted and sold to make up the value. The stability fee is to pay for this "insurance" and is denominated in dai but paid in MKR, which is then burned to decrease the supply. Or, it will be when the next iteration is released (multi-collateral dai). For now PETH takes that role, which is a pooled supply of ETH in the current system, which only takes ETH as collateral.
Asher Miller
I was kinda hoping the update would be done already. Ah well, I just really wanted to stake the DGX I've been accumulating while there's still tons of time left in the bear, get some cheap deals now.
Thomas Lee
The plan is Q3 for multi-collateral and MKR governance voting. The bear market may still last that long.
Connor Russell
Bought DAI with most of my ETH during the January selloff and locked up the rest for low leveraged trading and living expenses. It's literally the gift that keeps on giving and solves so many problems.
Eli Gomez
> The MKR token is the last resort collateral. In the event that a CDP loses value faster than it can be settled, MKR is minted and sold to make up the value.
Thanks, I did hear about this but now it finally made click and I understand it.
Samuel Thomas
Funny coincidence, I was just reading about this before I saw this thread. MKR seems comfy AF. Do you simply hold, or are you actively calling the functions to cash in on loans? I'm not sure how this works, yet, but it sounds really compelling. It's frankly cool as fuck.
Brody Williams
> comfy AF
It's really comfy if you can shake loose the feeling of impending doom whenever ETH seems to be crashing. A lot of this will be solved with multi-collateral loans, since DGX creates a nice hedge at gold value.
> Do you simply hold, or are you actively calling the functions to cash in on loans?
I just hold, I was earlier running the MakerDAO bot which takes the spread from DEX's and liquidations. But I don't have that much liquidity, and profitability has been going down since more and more people are running bots.
> I'm not sure how this works,
It looks complicated but is actually quite easy.
> Go to dai.makerdao.com > Unlock your metamask > On the right side enable token allowances > Hit the button to open your CDP (collateralized debt position) > Wrap your ETH (W-ETH) which you want to collateralize (Wrap/Unwrap ETH) > Then pool your DAI into the MakerDAO pool ("convert weth to peth") > Once pooled, Lock ETH into your CDP > Once locked, draw DAI as a loan.
You can exchange DAI to ETH on oasis.direct or oasisdex.com You will need a tiny amount of MKR token to later close your loan. You can find more stats on mkr.tools
Julian Martin
> Pool your ETH
not dai*
Noah Jenkins
>Gonna sage this thread ?
Jose Martinez
If you don't trade with your ETH, litterally the best thing to do with it is to put it in a CDP and draw out dai. Eth probably won't go down any more then it has and if it goes up you can just draw more dai against your CDP.
Daniel Carter
Can you give me an ELI5-style explanation on what you're doing here, exactly? Are you essentially lending your ETH and drawing interest on it?
Cameron Butler
>All without having to sell a single of my ETH But we are in a bear market, wouldn't you be better if you sold all your ETH in February and re-bought now or even lower later on? Also how did you not get liquidated?
I've only read a little bit about this because I was planning to get a loan myself a few months ago but it just didn't seem like it was worth it. Cashing out and buying in as coins bottom out seemed like a better option without having to worry about the loans or liquidations, actually it's way easier mentally to whether the bear market because the cheaper ETH is, you know you can buy even more with all that fiat you cashed out months ago.
Maybe I'm missing something here but I just don't see that many advantages to this other than being a neat little system you can play with.
>Eth probably won't go down any more How can you be this confident in this market? ETH could go as low as $100. Bitcoin could easily still halve in value if we're to repeat 2014 cycle and ETH can still halve in satoshi value. Lets say the bottom is not at $100 but $200, what does this mean for your loan once it reaches that price, you're liquidated long before that?
Carter Long
You're basically taking out a loan, using ETH as collateral. If it makes more sense compare it to a mortgage where the bank takes possession of your house in return for lending you money. The amount you draw out determines at what price the smart contract liqidates your collateral, to pay for the loan u took, but this shouldn't be the case as long you don't draw out the maximum amount. So if you weren't gonna use the eth in the first place you can put it in a CDP, get dai out if it, use dai for whatever you want, and when you're done you pay back the dai and a .05% apr. For example you could trade with the dai and make a profit, with no risk to your initial investment.
Evan Campbell
> But we are in a bear market, wouldn't you be better if you sold all your ETH in February and re-bought now or even lower later on?
yes of course, with the benefit of hindsight I would have been much better off. But back then I did not know ETH would go much lower. I did stay very cautious, never leveraged myself more than 250% on my liq. ratio.
> Also how did you not get liquidated?
I started out with small loans and always backed them up with an investment (initially I bought scooters to rent to a local restaurant). Later on when ETH dipped I heavily leveraged myself and took some profits on the way up (got lucky probably). I got close to liquidation a few times, I did have to sell my ETH then, but later bought back roughly the same amount and paid back the difference in loan on the way up.
Right now in the same situation where I bought a lot of ETH with DAI from my CDP, waiting for ETH to go above 500$ so I have some more DAI to pay off my debt. If that does not happen I can pay it back with the profit from my investments (gonna take me about 4 months).
The thing about this whole system however is, that if you play the game as I do, you must assume that ETH and Crypto will never stop growing. Because if ETH crashes, its over. That is why I am leveraging myself in real world investments, hoping that I will legit ROI myself on my entire CDP one day (1-2 years) without having to rely on ETH's price. As great MakerDAO is, it does add a lot of risk onto an already risky asset.
Jace Ortiz
> I did have to sell my ETH then
Sold ETH for DAI, lowered my liquidation price and later bought back in*
Bentley Watson
It's 0.5% not 0.05%. Still better than anything you're likely to get elsewhere.
Parker Cook
How safe is Dai as a stable coin compared to Tether?
Christopher Williams
more bots that are trading it the more safe. seems like there's enough bots doing so RN
Matthew Morris
Best exchange to buy Dai? Seems like it's super low volume everywhere which is annoying.
Nicholas Powell
The risks are different. Tether has the risk that the trusted party runs off with the money. Dai has the risk of an unknown flaw in the smart contract or a sudden catastrophic collapse of the price of ETH. The first is unlinkely, the maker foundation have been one of the most rigorous and thorough with their code reviews and bug bounties and audits and their work towards formal verification. The "market crash undermining collateral" risk will be greatly reduced when multicollateral comes online and things like DGX back dai too. Overall dai is probably less risky now, will definitely be less risky by Q3, and is much more in line with the decentralised ethos.
Jack Hall
From a trading perspective - borrowing dai to buy more eth and then eth goes up and you pay back the loan and have additional eth - is this any different/better than margin trading?
I get the liquidation levels of the margin vs dai may offer various pros/cons... but fundamentally this seems quite similiar to me - though I just heard about maker right now so i may be missing something
Nathaniel Russell
Yes, borrowing dai and using it to buy eth is equivalent to going margin long. Two important advantages from margin trading on an exchange: it's trustless and your cost of borrowing is only 0.5% per year. Disadvantages: It's onchain so you have to pay gas fees, and the liquidation threshold means you can't really get above 2x leverage (the closer to 3x you get the more in danger of liquidation you are. At 3x you'll get liquidated on any downward move at all).
Zachary Perez
Only know margin trading from Kraken and Polo. The difference here for me is that I can cash out my margin position without having to liquidate my holdings. My ETH basically becomes a piece of digital financial real estate I can mint DAI from as the entire market moves. And it's a pretty sweet deal to have a way to convert the DAI to real life investments which also generate ROI. You don't have to permabull this, just have a plan and play it safe. That's what I am doing. It's basically generating my income.
Noah Cruz
thanks, solid post and good info
Easton Perez
This, it's decentralized and everything but having a Max 3x leverage ain't that great. As time goes on and the dapp becomes more stable and trustworthy they'll reduce the collateral debt ratio. I'm hoping once this hits mainstream it'll go down to >110% (can't go under 100% for obvious reasons)
Jeremiah Carter
why wouldn't you just use easycdp or autocdp lmao
Liam Ross
ikr. I got used to the MakerDao backend and am too autistic to switch.
Luis Lee
Can you explain how does DAI keep a flat rate? Does that work like a peg with the smart contract selling and buying(eth I assume) to keep it stable?
Luke Ward
Is Bancor the best place to trade for Dai?
Logan Reyes
Adoption of these dApps also makes ETH more valuable over time. I figure that's obvious, but by how much? .technically MakerDAO could be collateralized into infinity, as long there is backer, right? Makes you think about Peter Thiel and IBM are about to get involved into Stablecoin projects. Augur is a even more advanced beast, haven't had the time to fully understand it completely yet.
Check the different rates on OasisDex and Bancor. I use Oasis if I have to.
>OasisDex seems like at any given time there's only a very small amount for trade there, literally just a couple grand worth
Julian Moore
There's also oasis.direct, but yes, all DEX's suffer from some less than ideal spreads.
I generally do not buy from DEX's. I mint the DAI at 1:1 $ price at CDP margin. The only time I actually sell ETH for DAI here is when I have to decrease my margin liquidation price.
Lincoln Hughes
>I generally do not buy from DEX's. I mint the DAI at 1:1 $ price at CDP margin. Wow, I'm a brainlet, I didn't realize you could do this. So I can simply call the contract and get Dai for $1 every time if it's above $1 on exchanges? Bancor has pretty big price slippage with large amounts.
Jack Ortiz
Kys.
Connor Adams
In short, not directly by buying or selling but by incentivising others to do so. There's two main mechanisms in use now, and a third optional one that isn't at the moment. The simple but hopefully never used one is global settlement. If the system breaks down, the whole thing can be stopped. All dai is exchanged for exactly the right value of assets. So if you see dai is staying below the target price, you can buy it up and either it returns to the proper price and you make substantial profit, or the system is globally settled and you again make significant profit. And vice versa for selling/shorting dai. So even if it is never used (and hopefully it isn't), the threat of global settlement keeps the price near where it's supposed to be. Secondly, dai is drawn or paid off from CDPs at the target price. If you have dai debt, but you can buy dai below the proper price and pay off your debt cheaper, then you make a profit. And if you have collateral and the price is high, then you profit from borrowing dai against it and selling. Thirdly: dai at the moment is pegged to the dollar. But that need not be so forever. If extreme market forces work against the peg, the target rate (of change in the target price per year) can be unlocked from its current value of 0 and allowed to be set by a simple control mechanism that increases the rate if the price of dai is above the target price and decreases it if the price is below the target price. This allows for large, long term market imbalances to be reflected in a longterm appreciation or depreciation of the currency. So if far more people want a stablecoin than want credit for example, they end up paying for it via a slight inflation that incentivises the credit side of the equation (more than the 0.5% interest rate and you actually profit from holding a dai debt position, since your debt gradually decreases in value). This third mechanism isn't planned to be activated any time soon, since there's a
Evan King
If you are holding Dai and owe a debt to the contract, what could possibly incentivize you as an individual to pay it back if the price of Ether increases significantly in a short period of time?
Jeremiah Adams
substantial user experience benefit from having $1 = 1 dai. The whole thing is a complex cryptoeconomic machine that takes a while to fully understand. Read the whitepaper a few times if you want to to really wrap your head around it: makerdao.com/whitepaper/DaiDec17WP.pdf The maker foundation runs large market maker bots there, so the liquidity is better than the volume implies. You need to lock up >150% collateral but yes. The price of ether doesn't matter, only the price of dai. And if you're holding dai and dai debt then you're paying interest for no reason. You have to spend the dai on something to make it worthwhile.
Lucas Wilson
I am principally looking to use Dai as a simple hedge and to maintain the fiat value of my crypto without actually selling for fiat, although I'm interested in MKR and the project in general as well
I assume if the former is my main goal then I'm better off simply buying Dai via dex/bancor
Angel Sanchez
Yes. If you want less risk, buy dai. If you want more risk, borrow dai and use it to buy more crypto. If you just want to cash out without depleting your stack or incurring capital gains taxes, borrow dai and sell it for fiat.
Wyatt Smith
>borrow dai and sell it for fiat how would you do that?
Leo Carter
Open a CDP. Deposit ETH. Draw dai. Sell dai. Depending on which exchanges you've already done kyc on, you probably have to sell dai to eth or btc, then eth/btc to fiat. There are some dai/fiat gateways but no good ones. This isn't without risk of course. If your eth falls in value below 150% of the value of your dai you will be liquidated, which incurs a 14% liquidation penalty and sells your collateral to cover all your debt. So make sure you're plenty overcollateralised.
Samuel Anderson
>If you just want to cash out without depleting your stack or incurring capital gains taxes, >or incurring capital gains taxes Isn't this practically impossible?
Ethan Myers
Nope. You haven't sold your assets, you've just locked them up as collateral. If you get liquidated that counts as a sale though, and you'll have to pay tax then.
Hunter Murphy
You're taking a loan on a collateralized asset. You didn't sell you ETH. You took a loan. As long as you quickly sell that DAI for ETH and cash out the ETH, there will be tax implications.
Camden Rodriguez
If you have ETH and want to borrow DAI. You do so by opening a CDP (collateralized debt position) on MakerDAO. It lets you lock your ETH in a contract, then collect DAI from the makerDAO system at a collateral ETH loan. You then sell this DAI for fiat. If ETH goes up, bonus points.
You missed a step where they sell dai for eth. Otherwise correct. One more thing, use easycdp.com instead of the makerdao.com interface, they've abstracted away a lot of the backend fiddlyness.
Jordan Garcia
Right, so there's no way to do this other than as a short-term loan—you can't actually use this as a vehicle to exit from crypto to fiat in any way is what I'm getting at. The entire point is to provide loans and also peg Dai to USD, but nothing beyond that, correct?
Andrew Howard
Yes it's not for "cashing out" in the sense of selling everything and leaving, but if you want to sell a little and move some of your portfolio back into govbucks, this lets you do it without incurring capital gains tax or reducing your exposure. Obviously you need to pay back the dai to get your collateral back at some point in the future, but it doesn't need to be short term, the interest is only 0.5%.
William Gonzalez
technically the only way to leave money in crypto and to cash out at the same time is to borrow at collateral somehow. If you can ROI or profit on that loan you're pretty golden. And if ETH goes up then you are golden too, because you sold 0 of your actual ETH, and you are gaining more USD value from your ETH holdings than you initially lend. Of course, if ETH goes down, you can get into a bad position here. It's not risk free, but you can control the level of risk yourself.
Nicholas Long
So this is effectively margin trading with the advantage that in theory you can buy things IRL with the borrowed cash
makes sense
Luke Edwards
Yes exactly. People have already bought off their mortgages and started businesses through CDP's.
Yeah I'm reading the paper and it seems solid except when liquidity dries up, but if that happened then everybody is fucked.
This is super interesting desu, an actual semi working peg. Since every peg always fails catastrophically this will be a chance to see what happens when its more free market oriented. Also, this seems like the way to short other crypto without going into USD.
In trading pegs are often called a free trade, if you see pegs failing you go all in if the peg fails you make millions from thousands and if it doesnt fail you just buy back your position for the same price so you lose nothing. That was what happened in britain in the 90's, to the EUR/CHF back in 2011 and hopefully soon to HK and the ayyyrabs.
Brody Ward
>In trading pegs are often called a free trade, if you see pegs failing you go all in if the peg fails you make millions from thousands and if it doesnt fail you just buy back your position for the same price so you lose nothing ...wow, I hadn't considered that. But if a crypto peg fails aren't you simply losing? Say Dai spirals out of control and 1 Dai is now worthless... how do you benefit from that?
Lincoln Harris
You would have to have something on the other side and count that Dai simply doesnt close forever which is likely if that happened. So yeah, you'd lose if the Dai peg broke. On the other hand since this is based on free market it probably will hold for longer. I mean, the HK peg has lasted more than 200 years(it was pegged to the pound before)
