/biz/ - Business & Finance

[Anonymous No.15148355]

Can someone explain to a brainlet of why someone would enter a cdp with interest rate on makerdao for dai, vs just buying it off the exchange? Both give you stability?

[Anonymous No.15148373]

>>15148355
gives you leverage with no KYC and no counterparty risk.

[Anonymous No.15148815]

>>15148373
Thanks fren... also if dai got completely fucked up and lost its peg do I get my eth back from global settlement if I took out CDP? Whst if I just have dai in a wallet that I bought off exchange?

[Anonymous No.15148917]

>>15148815
This is how it works anon. The emergency shutdown system will be tested when we switch from single collateral Dai to multi collateral Dai.

Step 1: Emergency Shutdown is triggered and CDP users withdraw assets
If enough MKR voters or Emergency Oracles selected by Maker Governance believe that the system is subject to a serious attack, or if an Emergency Shutdown is scheduled as part of a technical upgrade, they can trigger the Emergency Shutdown function. This stops CDP creation and manipulation, and freezes the Price Feeds at a fixed value that is then used to process proportional claims for all users. CDP users are able to immediately withdraw the net value of collateral in their CDPs from the moment Emergency Shutdown is triggered.
Step 2: Post-Emergency Shutdown auction processing
After Emergency Shutdown has been triggered, a period of time is needed to allow pre-existing Collateral Auctions to finish. The auction processing period is set by Maker Governance to be slightly longer than the longest Collateral Auction duration, which will guarantee that at the end of the auction processing period there are no more outstanding auctions.
Step 3: Dai holders claim the remaining collateral with their Dai
After the auction processing period is complete, Dai holders can use their Dai to claim collateral directly at a fixed rate that corresponds to the calculated value of their assets, based on the target price of Dai. E.g. If the Dai Target Price is 1 U.S. Dollar, the ETH/USD Price is 200 and a user holds 1000 Dai when Emergency Shutdown is activated, after the processing period they will be able to claim exactly 5 ETH from the Maker Platform. There is no time limit for when the final claim can be made. In Multi-Collateral Dai Dai holders will get a proportional claim to each of the collateral types that exist in the collateral portfolio.

[Anonymous No.15148930]

>>15148917
mergency Shutdown is a process that can be used as a last resort to directly enforce the Target Price to holders of Dai and CDPs, and protect Maker against attacks to its infrastructure. Emergency Shutdown stops and gracefully settles the Maker Platform while ensuring that all users, both Dai holders and CDP users, receive the net value of assets they are entitled to. Effectively, it allows Dai holders to directly redeem Dai for $1 of collateral at the point in time when the Emergency Shutdown is initiated. In Single-Collateral Dai the process is controlled by Emergency Oracles chosen by MKR voters.

In Multi-Collateral Dai the process is fully decentralized and controlled by MKR voters who can trigger it by depositing MKR into the emergency shutdown contract. A minority, but significant, quorum of MKR voters is necessary to instantly trigger an Emergency Shutdown. Initially this quorum will be 50,000 MKR. For additional security, MKR voters will also still be able to select Emergency Oracles that have the power to unilaterally trigger an Emergency Shutdown.

Examples of serious emergencies are long term market irrationality, hacking or security breaches. The Emergency Shutdown mechanic will also be used to facilitate system upgrades.

[Anonymous No.15149036]

>>15148917
Ok so what's the advantage of doing the cdp vs just holding dai you bought on an exchange? I have to pay interest on cdp. So is my advantage that I get to claim my collateral before dai holders do?

[Anonymous No.15149277]

>>15149036
You use a cdp to gain access to the value of your coins without selling them. If you think The value of ETH is going to rise you open a cdp and use the Dai to buy more ETH. When ETH goes up you sell the amount needed to close the cdp and keep the rest.

You can expose yourself to new markets with a cdp without having to sell your ETH by using the Dai something other than Ethereum.

You buy Dai from an exchange to protect your profits when the market is going down or to repay your cdp.

The best time to open a cdp is when Dai is slightly above a dollar since you’ll have slightly more purchasing power.

The best time to buy Dai to pay down a cdp is when Dai is slightly under a dollar since you’ll be paying back less than you actually borrowed if you opened the cdp when Dai was worth more than a dollar.

[Anonymous No.15149326]

>>15149036
>>15149277

If you want to hold Dai as an investment you can lend it out on various defi platforms and gain around 12% interest.

After multi collateral Dai is introduced there’ll be a Dai savings rate which will basically be like a Dai savings account that’ll pay an amount of interest decided by MKR token holders.

[Anonymous No.15149330]

>>15149326
Dai savings rate will be an Ethereum smart contract