<s>
Dai	B-Protocol
(	O
or	O
DAI	B-Protocol
,	O
formerly	O
Sai	O
or	O
SAI	O
)	O
is	O
a	O
stablecoin	B-Protocol
on	O
the	O
Ethereum	B-Application
blockchain	B-Application
whose	O
value	O
is	O
kept	O
as	O
close	O
to	O
one	O
United	O
States	O
dollar	O
(	O
USD	O
)	O
as	O
possible	O
through	O
a	O
system	O
of	O
smart	B-Application
contracts	I-Application
and	O
the	O
decentralized	O
participants	O
those	O
contracts	O
incentivize	O
to	O
perform	O
maintenance	O
and	O
governance	O
functions	O
.	O
</s>
<s>
Dai	B-Protocol
is	O
maintained	O
and	O
regulated	O
by	O
MakerDAO	B-Protocol
,	O
a	O
decentralized	B-Operating_System
autonomous	I-Operating_System
organization	I-Operating_System
(	O
DAO	O
)	O
composed	O
of	O
the	O
owners	O
of	O
its	O
governance	O
token	O
,	O
MKR	O
,	O
who	O
may	O
propose	O
and	O
vote	O
on	O
changes	O
to	O
certain	O
parameters	O
in	O
its	O
smart	B-Application
contracts	I-Application
in	O
order	O
to	O
ensure	O
the	O
stability	O
of	O
Dai	B-Protocol
.	O
</s>
<s>
Together	O
,	O
Dai	B-Protocol
and	O
MakerDAO	B-Protocol
are	O
considered	O
the	O
first	O
example	O
of	O
decentralized	B-Protocol
finance	I-Protocol
to	O
receive	O
significant	O
adoption	O
.	O
</s>
<s>
Dai	B-Protocol
is	O
created	O
from	O
an	O
overcollateralized	O
loan	O
and	O
repayment	O
process	O
facilitated	O
by	O
MakerDAO	B-Protocol
's	O
smart	B-Application
contracts	I-Application
in	O
the	O
form	O
of	O
a	O
decentralized	B-Application
application	I-Application
.	O
</s>
<s>
Users	O
who	O
deposit	O
Ether	B-Application
(	O
or	O
other	O
cryptocurrencies	O
accepted	O
as	O
collateral	O
)	O
are	O
able	O
to	O
borrow	O
against	O
the	O
value	O
of	O
their	O
deposits	O
and	O
receive	O
newly	O
generated	O
Dai	B-Protocol
.	O
</s>
<s>
The	O
minimum	O
collateralization	O
ratio	O
for	O
Ether	B-Application
is	O
currently	O
set	O
at	O
150%	O
,	O
which	O
means	O
a	O
depositor	O
of	O
$150	O
worth	O
of	O
Ether	B-Application
may	O
borrow	O
up	O
to	O
100	O
Dai	B-Protocol
(	O
worth	O
roughly	O
$100	O
)	O
.	O
</s>
<s>
Upon	O
repayment	O
of	O
the	O
loan	O
and	O
its	O
accrued	O
interest	O
,	O
the	O
returned	O
Dai	B-Protocol
is	O
automatically	O
destroyed	O
,	O
and	O
the	O
collateral	O
is	O
made	O
available	O
for	O
withdrawal	O
.	O
</s>
<s>
In	O
this	O
way	O
the	O
USD	O
value	O
of	O
Dai	B-Protocol
can	O
be	O
said	O
to	O
be	O
backed	O
by	O
the	O
USD	O
value	O
of	O
the	O
underlying	O
collateral	O
held	O
by	O
MakerDAO	B-Protocol
's	O
smart	B-Application
contracts	I-Application
.	O
</s>
<s>
By	O
controlling	O
the	O
types	O
of	O
accepted	O
collateral	O
,	O
minimum	O
collateralization	O
ratios	O
,	O
and	O
the	O
interest	O
rates	O
for	O
borrowing	O
or	O
storing	O
Dai	B-Protocol
,	O
MakerDAO	B-Protocol
is	O
able	O
to	O
control	O
the	O
amount	O
of	O
Dai	B-Protocol
in	O
circulation	O
,	O
and	O
thus	O
its	O
value	O
.	O
</s>
<s>
The	O
MKR	O
token	O
also	O
serves	O
as	O
an	O
investment	O
in	O
the	O
MakerDAO	B-Protocol
system	O
.	O
</s>
<s>
This	O
mechanism	O
aims	O
to	O
make	O
MKR	O
deflationary	O
in	O
correlation	O
to	O
the	O
revenues	O
from	O
lending	O
Dai	B-Protocol
.	O
</s>
<s>
MakerDAO	B-Protocol
was	O
formed	O
in	O
2014	O
by	O
Danish	O
entrepreneur	O
Rune	O
Christensen	O
.	O
</s>
<s>
On	O
December	O
18	O
,	O
2017	O
,	O
Dai	B-Protocol
and	O
its	O
associated	O
smart	B-Application
contracts	I-Application
were	O
officially	O
launched	O
on	O
the	O
main	O
Ethereum	B-Application
network	O
.	O
</s>
<s>
The	O
price	O
of	O
Dai	B-Protocol
was	O
successfully	O
kept	O
close	O
to	O
one	O
US	O
dollar	O
during	O
its	O
first	O
year	O
of	O
existence	O
,	O
even	O
though	O
the	O
price	O
of	O
Ether	B-Application
,	O
the	O
only	O
collateral	O
available	O
at	O
the	O
time	O
,	O
declined	O
by	O
more	O
than	O
80%	O
during	O
the	O
same	O
time	O
period	O
.	O
</s>
<s>
In	O
September	O
2018	O
,	O
venture	O
capital	O
firm	O
Andreessen	O
Horowitz	O
invested	O
$15	O
million	O
in	O
MakerDAO	B-Protocol
by	O
purchasing	O
6%	O
of	O
all	O
MKR	O
tokens	O
.	O
</s>
<s>
In	O
2018	O
,	O
MakerDAO	B-Protocol
formed	O
the	O
Maker	O
Foundation	O
,	O
run	O
from	O
Copenhagen	O
,	O
which	O
serves	O
to	O
help	O
bootstrap	B-Application
the	O
ecosystem	O
by	O
,	O
for	O
example	O
,	O
writing	O
code	O
needed	O
for	O
the	O
platform	O
to	O
function	O
and	O
adapt	O
.	O
</s>
<s>
In	O
2019	O
,	O
MakerDAO	B-Protocol
experienced	O
internal	O
struggle	O
over	O
whether	O
it	O
should	O
integrate	O
more	O
with	O
the	O
traditional	O
financial	O
system	O
.	O
</s>
<s>
Christensen	O
wanted	O
greater	O
regulatory	O
compliance	O
to	O
allow	O
for	O
assets	O
besides	O
cryptocurrency	O
to	O
serve	O
as	O
collateral	O
for	O
Dai	B-Protocol
.	O
</s>
<s>
The	O
struggle	O
led	O
to	O
the	O
departure	O
of	O
MakerDAO	B-Protocol
's	O
CTO	O
.	O
</s>
<s>
In	O
March	O
2020	O
,	O
as	O
a	O
result	O
of	O
extraordinary	O
market	O
volatility	O
at	O
the	O
onset	O
of	O
the	O
COVID-19	O
pandemic	O
,	O
Dai	B-Protocol
experienced	O
a	O
deflationary	O
deleveraging	O
spiral	O
that	O
,	O
at	O
its	O
peak	O
,	O
caused	O
it	O
to	O
trade	O
for	O
up	O
to	O
USD	O
$1.11	O
before	O
returning	O
to	O
its	O
intended	O
$1.00	O
valuation	O
.	O
</s>
