There are challenges in the world?s financial system. Some of them include banking bailouts, trotting debt, as well as currency devaluations. Hence, these challenges require a solution. A potential solution is known as decentralized finance (DeFi). Ethereum has been chosen as the platform for DeFi while the Dai stablecoin is achieving new highs.
The Maker Decentralized Autonomous Organizationintroduced Dai. Dai is a stablecoin, and it is pegged to USD. However, it is different from the conventional stablecoins like Tether because it isn?t backed by dollars in a vault but collateral, thereby bringing fluctuations to its supply. Currently, out of all lending platforms, Maker is at the top having about 53% share.
There is a huge trust challenge with Tether because they can mint it when desired without backing proof except for their word. The increment of Dai only comes when there is increment in the collateralstaked on the network. The majority of such collateral is Ethereum.
The growth of DeFi brings increment to the quantityof Ethereum locked in the system; hence, Ethereum benefits from a record high for Dai.
Defipulse.com reported that the current amount locked in DeFi is more than $650 million. The highest amount of all time is $685 million. The percentage share of ETH in quantity locked is 2.2%.
A look at the charts of DeFi charts reveals a bullish trend while ETH remains dormant. There are several technical resistances for Ethereum as time passes towards the migration of the network to proof of stake. Besides DeFi, this will also help in earning passive income when 32 ETH is staked.
As BTC stores wealth, ETH is bringing a new shape to finance?s future. Hence, lending platforms like Maker could experience stable growth as the evolution of monetary systems occur.