In nearing its first yearly anniversary, one of ethereum’s most successful smart contract has broken a record of sorts in moving $177,688,243 worth of DAI in 10,000 transactions between circa 1,000 unique addresses.
While chaos reigned in crypto markets and to some extent stock markets as well as oil, dai stayed stable, moving only cosmetically below or above $1.
That’s while “there have been 195 liquidations for a total of 75,000 ETH. CDP 3228’s entire liquidation was sold off in less than an hour. And system collateralization never dropped below 240%. Dai is still $1,” according to Mike McDonald, a security engineer who created a stats tool for dai.
The decentralized tokenized dollar has now risen to 64th in market cap, handling exchange trading volumes of about $11 million and ten times more than that on-chain volumes on a market cap of $65 million.
Making this one of the most valuable smart contract that at times holds about one million eth. So proving, as long as it remains unhacked, that the concept of programmable money through smart contracts can and does work.
That has incentivized different variations of Dai. Compund, for example, kind of does the same thing but pays interest for stored eth and allows the borrowing of dai itself and other tokens, with it so acting to a limited extent like a natively digital bank.
There are some other projects that are working on more sophisticated financial products, like margins or options as well as futures.
You could also effectively tokenize stocks in a roundabout way. Code is speech, the US court of appeal has ruled, so if it is indeed the smart contract that is performing all functions automatically, like in dai, then the government can not require any licensing because that impedes the right to free speech.
As there would be a clash here between Securities Act 1933 requirements and the constitution, then you’d think the constitution would prevail.
The benefit of such foresight by both the founders and the court of appeal may be significantly higher liquidity and flexibility as well as efficiency.
Apple, for example, which has a market cap of a trillion or so, has trading volumes of just $10 million during the past 24 hours.
That makes the stock very illiquid and its price not very realistic. The entire stock industry, moreover, is perceived as inaccessible and a playground for just rich boys, rather than a method of investment for ordinary savers.
That’s primarily because stocks require a lot of trust. You need to trust that the company will indeed issue 1,000 shares rather than secretly issue 10,000. You have to trust that the broker actually does have a share rather than printing it out from thin air. Same for exchanges. Same for banks which usually hold them.
With dai or natively digital stocks, you need to trust no one. You can just download the ethereum node software and so gain a source of indisputable truth which can not be faked or manipulated.
With all these intermediaries basically replaced by code, people can move value – whether a stock or whatever it is – globally, in seconds, for almost free and in a way that ownership is indisputable.
That is exactly what people are doing with dai as well as other tokens and coins. In the process, with this one metric of incredible liquidity compared to stocks, so showing the superiority of blockchain assets and making stocks already feel and look like an anachronistic, outdated, and to our children probably even a stupid concept for why on earth should we trust what we can’t verify.