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Why Dai Growing to Record High Indicates Positive Ethereum Growth

In a world plagued by banking bailouts, galloping debt and currency devaluations, a solution is needed. Enter decentralized finance, or DeFi, the future of banking where you are the bank. Ethereum is the platform of choice for DeFi, the Dai stablecoin is hitting new highs, and Maker is moving.

Future Finance Based on Ethereum

Dai is a dollar pegged stablecoin from the Maker Decentralized Autonomous Organization. Unlike traditional stablecoins such as Tether, it is not actually backed by dollars in a vault but collateral which causes its supply to fluctuate.

Tether has massive trust issues as it can be minted at will with no proof of backing aside from their word. Dai only increases when the collateral staked on the network increases and most of that collateral is Ethereum.

As DeFi grows, the amount of Ethereum locked in the system also increases which is why a record high for Dai is also positive for ETH.

According to defipulse.com there is currently over $650 million locked in DeFi. It too is approaching its all-time high of $685 million which occurred in June this year.

There is also a record amount of Ethereum at 2.42 million, or 2.2% of the entire supply locked in DeFi. The site also reports that there is $30 million worth of Dai stored in DeFi which is almost a third of its supply now that it has reached the milestone $100 million.

Maker’s lending platform is the current market leader with almost a 53% share. MKR has been one of the best performing crypto assets this month with a gain of over 26% in just over a week.

It is likely that Maker will continue to gain as the launch of a highly anticipated multi-collateral Dai (MCD) nears. The MCD will allow more tokens to be staked as collateral in the system, it also includes Dai Savings Rate which gives the option to earn savings simply by holding Dai.

When ETH Moon?

The DeFi charts are all clearly bullish yet Ethereum still slumbers. If 2017 was the year crypto boomed, 2019 is the year DeFi hits the scene. Since gains are more sedate, but far superior to anything a bank can offer, the growth is likely to be slow and steady rather than one huge speculation bubble.

Ethereum has a lot of technical hurdles ahead for the network as it migrates to proof of stake. In addition to DeFi, this will provide another way to earn passive income by staking 32 ETH.

Bitcoin maybe a store of wealth but Ethereum is shaping up to be the future of finance, so lending platforms such as Maker with the Dai stablecoin are expected to see a lot of steady growth as monetary systems evolve.

New generations of investors will not be too confident with banks given their track record. So a decentralized solution with people in full control of their own finances is exactly what is needed.

Image from Shutterstock

The post Why Dai Growing to Record High Indicates Positive Ethereum Growth appeared first on NewsBTC.

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