UNITALKS | Andy Milenius Of MakerDAO: Crypto Price Volatility Will Hinder Real Economy onto the Blockchain
Cryptocurrencies are volatile in nature – they can rise or fall significantly in a matter of minutes. At the start of 2018, rumours that South Korea will tighten cryptocurrency regulations stirred the market so much that all major cryptocurrencies took a huge price dip of at least 30%.
Bitcoin fell from it’s all time high of almost USD 20,000 in 2017 to about USD 10,000 at this point of writing, and this fall of 50% is scary. If you are a business owner seeking to accept cryptocurrency payments, you may have already thought twice due to the volatile nature of cryptocurrencies.
Enter MakerDAO, who has developed a stablecoin pegging their cryptocurrency price to US dollars. The value of their native coin DAI is backed by other cryptocurrency assets and is governed by a blockchain ecosystem consisting of various smart contracts, thus allowing the DAI to closely follow the value of US dollars.
Today Unitimes had the pleasure of speaking with Andy Milenius, Software Engineer at DappHub (and for MakerDAO), on how MakerDAO was all started.
Andy was a software developer at a major tech corporation before he started working on blockchain and cryptocurrencies. Do also stay tuned to read on his blockchain journey as a software engineer.
Q: What inspired the team to develop MakerDAO?
We were inspired to create MakerDAO because price volatility is one of the most fundamental problems associated with moving the real economy onto the blockchain. A stable medium of exchange must be solved before most other dapps will become useful.
Q: A stablecoin – unlike traditional cryptocurrencies – minimizes price volatility by pegging it to a relatively stable asset. How would a stablecoin impact the way things are done in the blockchain world?
A stablecoin makes it so that the value of long running financial transactions, such as a loan or a position in a prediction market, will be easily predictable.
This type of budgeting is an essential part of any business, making it a prerequisite to most commercial activity on the blockchain.
Q: In simple terms, can you describe how MakerDAO works? For a start, how is DAI (MakerDAO’s native token) pegged to the US dollar?
Unfortunately I can’t explain the entire system in simple terms, but the most important idea is that Dai is an asset-backed hard currency. This means that every Dai is backed by some kind of valuable asset, which is locked into escrow in the secure Maker smart contract platform. Any user can lock up their valuable assets as collateral and issue Dai against it. To unlock the collateral, users simply repay the Dai that was issued plus a fee based on how long it was outstanding.
For more information on how MakerDAO and DAI works, you can refer to this detailed explanation by the Maker Team here: Maker for Dummies: A Plain English Explanation of the Dai Stablecoin
Q: If I am an individual actor investing in cryptocurrencies for long-term profits, how can the DAI impact my investment strategy?
Dai is an efficient way to hedge against falling prices in other cryptocurrency investments. Getting in and out of Dai is quick and easy because it is native to the blockchain. Because it is made entirely out of smart contracts, Dai is a more transparent option when looking for price stability on the blockchain.
Q: How did you encounter blockchain?
I found it while looking into cheap online solutions for international remittances.
Q: What are the differences doing software engineering for well-established corporations versus blockchain startups?
Most well-established corporations have to deal with far more massive scale than decentralized applications today. As blockchains experience wider adoption, the technical requirements will transition from a research focus to more traditional engineering priorities.
Q: What do you think are some of the biggest challenges faced by software engineering in blockchain?
The developer tools and standards are being actively developed at the same time as most projects’ applications. This means that developers need to be far more involved in affairs below them in stack when compared to other technologies.
Q: Let’s discuss something slightly different and fun. If there is one thing you would say to encourage more developer talents to join the blockchain community, what would it be?
Join dapphub.chat for a great developer community and check out dapp.tools for useful development tools.
Q: Apart from MakerDAO, are you working on other projects?
Yes we’re working on dapp.tools which are development tools for using ethereum. We are also developing formal verification methods for smart contracts and we occasionally perform code reviews for other projects. We will be announcing many new initiatives in 2018.
Q: Blockchain is the buzzword nowadays, and conversation on this topic never stops. What do you think is the biggest challenge faced by corporations seeking to adopt this technology?
The biggest challenge is figuring out a way to relinquish the control they currently have over their users while still maintaining the core service elements of their business that a customer would rationally pay for.
Q: When do you think blockchain technology will go mainstream and enjoy widespread adoption by corporations worldwide?
Shortly after the launch of Dai version 2.0 this summer.
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