Stablecoins are digital assets designed to maintain a consistent price, often pegged to a fiat currency like the US dollar or collateralized against commodities like gold. Dai is the first product of the Maker organization. MakerDAO describes DAI as “…an asset-backed, hard currency for the 21st century — the first fully-decentralized stablecoin on Ethereum”. 1 Dai is worth $1 USD. Each Dai is backed by valuable assets held in the secure Maker smart contract platform. Anyone can lock their tokens up as collateral and issue Dai against them.
Cryptocurrencies are notoriously volatile in price, which is a large barrier for mainstream traders who rely on currency stability. Co-founder of Hydro Protocol, Bowen Wang, commented, “Working with MakerDAO to integrate Dai is a major milestone for Hydro Protocol in our mission to bring hybrid decentralized exchanges to more mainstream users.”
As a network layer protocol for high performance decentralized exchanges (or “relayers”), Hydro Protocol facilitates a turnkey large-scale creation of decentralized exchanges with shared liquidity pools. As the network of Hydro relayers grows, the pooled liquidity will provide a superior trading experience for both newer and more experienced traders. Integration of Stablecoins like DAI into the Hydro ecosystem will provide several significant advantages for our users. Not only will Hydro Based relayers be able to easily trade ETH and DAI to mitigate market volatility, but we expect to see more DAI denominated trading pairs for utility tokens on Hydro relayers in the near future. The ability to purchase utility tokens through a stable digital currency provides a less volatile and risky trading experience for our Hydro relayer users.
Stablecoin like Dai plays a profound role of exploring the full potential of blockchain technology. You can create a Collateralized Debt Position (CDP) and deposit ETH as collateral to receive Dai. The CDP allows the user to lock up volatile digital assets like ETH and lends stable Dai tokens which the user can trade for other tokens in a Dai-denominated marketplace. CDPs effectively empower users to segregate the risks associated with holding volatile crypto assets while performing trading activities using a more stable Dai instead.
We believe that the Dai Stablecoin System (with a completely decentralized infrastructure) can provide DDEX users a wide range of benefits and opportunities. Through DDEX, users who hold ETH can now borrow Dai against them. Dai users don’t need to understand the internal mechanics in order to use Dai; they can be sure that Dai will remain stable at $1 without worrying about the specific details of CDPs.
As our partnership and technology continues to develop, keep an eye out for additional trading pairing options coming soon on DDEX! We will have tokens paired directly with Dai instead of ETH (Example: ZRX-DAI, HOT-DAI).
New to Hydro?
Hydro is a network layer protocol for high performance decentralized exchanges and marketplaces with built-in incentives for coordination. Hydro utilizes’Federated Liquidity Pools’ (FLP) to address the issue of liquidity sharing among various decentralized exchanges.
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Thank you very much for your support.
Hydro Protocol Team