Makerdao - the Defi "pawnshop" (beginner concept)

You can skip this post if you are already a DeFi expert. I will only be posting crypto noob intro kind of stuff in near future.

Previously I have talked about Automated Money Maker (so you don't need to trade on CeFi if you know what you are doing). DeFi also has "pawnshops" to increase your liquidity if you need it.


What is Makerdao? 


MakerDAO is an Ethereum-based protocol that issues the Dai stablecoin and facilitates collateral-backed loans without an intermediary.


I have here a very simple infographic for those TLTR.





So there, you have a simple "pawnshop concept" migrated to DeFi. Prices are being updated by oracles. 

Of course there's some technicality behind, like what happens during a liquidation for insufficient collateral coverage which I won't go into details.


Another similar Defi company is Compound Finance. You can read more about it here.




Let me see if I can do one for yield farming next.


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