Ecosystem

Dai and OMG: Uniting for a More Decentralized Tomorrow

by OmiseGO
Published on April 10, 2018

OMG’s currency-agnostic decentralized exchange will allow users the freedom to exchange and manage any digitized asset. However, the volatility of many cryptocurrencies makes them less than ideal as a medium for everyday transactions, in which users want to know that the money they are sending will be worth the same amount when it arrives at its destination.

Stablecoins provide a relatively static benchmark (as static as the currency to which they are pegged) within the volatility of the crypto market. But most stablecoins are centralized, backed by reserves held by private entities whose self-assessment of their own trustworthiness often leaves much to be desired.

Dai, on the other hand, is decentralized, its issuance and value transparently linked to assets held in smart contracts — a system that is better aligned with OMG both philosophically and functionally.

OMG and Dai will be coordinating in two ways going forward:

Dai Stablecoin on OMG network

We’re thrilled to say that Dai will be available on the OMG DEX. OMG network users will have the option to hold, send and trade against Dai from day one, gaining the benefits of a stabilized asset without having to rely on a centralized third party to guarantee its viability. With a decentralized stablecoin held on a decentralized exchange, your funds can’t be lost or revoked due to a single third party’s error, fraud or failure to thrive.

OMG Token as Dai Collateral

The Dai coin’s value is stabilized by collateral — valuable assets held in Maker’s smart contract platform. Dai’s initial release was single-collateral, allowing only Ether to be sent to the CDP (collateralized debt position) contract in exchange for Dai issuance. Maker will soon be releasing multi-collateral Dai, which will allow a variety of assets to be used as collateral for CDP creation. The OMG token will be among the first options offered.

OMG will be part of the foundation for the Dai decentralised stablecoin, and for other future decentralisation stablecoins too. Though fewer OMG will be available for staking on the OMG network, this will not have any detrimental effect on users or network security. Meanwhile, OMG will be able to store value both in Dai and on the OMG network, and effectively become a benchmark against which other things can be valued.

From conception both Maker and OmiseGO have been committed to delivering scalable, highly performant tools for disintermediated finance. We’re very much looking forward to playing a part in each other’s respective upcoming milestones: the OMG DEX will launch with a decentralized stablecoin immediately available as a trading pair, while the inclusion of OMG in Maker’s multi-collateral CDP gives users one more way to put their favorite token to work.

Read Maker’s announcement of this partnership on their blog.

Learn more about Maker and Dai:

OmiseGO
OmiseGO is innovation, open exchange, and blockchain. We innovate to create free and interoperable access to economic opportunities by building on blockchain technology. This is what has been driving OmiseGO since its foundation: creating pioneering and pragmatic solutions that can change lives.