Flood of Maker CDPs Open Upon New Coinbase Earn Dai Lesson

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Coinbase Earn, the educational arm of U.S. cryptocurrency exchange Coinbase, launched its first advanced lesson on the Dai stablecoin on June 26th. Since then, newcomers have been opening up MakerDAO Collateralized Debt Positions (CDPs) in droves to try drawing out Dai for themselves.

It comes as part of the exchange’s recent maneuverings to demystify DeFi for mainstream users.

Last month, Coinbase Earn rolled out its first four beginner Dai lessons, with each one awarding a small sum of Maker’s stablecoin upon the completion of simple quizzes.

Coinbase DAI

The new lesson is accordingly the most intensive one yet, as Coinbase seeded participants’ Coinbase Wallet’s with 0.02 ether (ETH) so the testers could use the app’s dapp browser to open an automated Dai loan through a Maker CDP.

Moreover, the San Francisco-based exchange rewarded anyone who completed the CDP crash course with 14 DAI — roughly $14 USD, as the Dai peg is currently slightly overachieving at $1.01. The novelty of the lesson and the promise of free cryptocurrency unsurprisingly led many novices opening up their first CDPs.

Campaign Brings an Explosion of Interest

The Maker ecosystem uses a dual-token model. MKR is the governance and fee token, being used to vote on Dai interest rates and cover accrued fees to close out CDPs.

Dai is the dollar-pegged stablecoin that can be drawn out as loans from such CDPs. Through smart contracts, users collateralize ether (and soon other cryptocurrencies) worth at least 150 percent of their Dai loan and can then pay back the loan over time.

Positions are automatically liquidated when they become undercollateralized, e.g. from price volatility.

It’s an interesting system to say the least, but skeptics say it’s distanced from everyday folks since many people don’t have cryptocurrency to collateralize in a CDP. That’s where the new Coinbase Earn advanced Dai lesson comes in, i.e. giving a new wave of users the chance to test out a cryptoeconomy innovation that they possibly wouldn’t have otherwise.

Notably, that wave has already proven to be a flood.

According to analytics website MakerScan, the number of Maker CDPs opened up in July 2019 was over 17,620 — a whopping increase of 1,953 percent from the 858 CDPs that were launched in June and easily more than the number of such positions opened across the last 12 months combined.

Of course, the boon is undoubtedly being driven mainly by Coinbase’s clout and its new advanced Dai lesson. As the most popular and widely used cryptocurrency exchange in the U.S., Coinbase has considerable reach when it comes to putting its campaigns front and center in America’s nook of the cryptoeconomy.

The grand question for now is whether the educational effort will lead to a temporary blip of interest with deeper adoption still years away or whether the advanced lesson will be something of a turning point in raising Maker’s profile.

Maintaining Stability, Exploring New Options

Within Maker’s arena, it’s paramount for the Dai stablecoin to maintain its dollar peg.

To do that, the Maker ecosystem consistently votes on the Dai Stability Free, which is the annual and routinely fluctuating interest rate charged to CDP owners for as long as they have Dai loans drawn out.

On July 29th, the Maker Foundation Interim Risk Team launched a community Governance Poll to help determine if that interest rate should be raised as high as 24.5 percent or as low as 16.5 percent. As associated Executive Vote will begin on August 2nd.

The latest Stability Fee deliberations come after Maker announced a few weeks ago that Multi-Collateral Dai (MCD) was on the verge of being released. MCD would allow Maker CDP users to collateralize community-approved cryptocurrencies beyond just ether.


William M. Peaster is a professional writer and editor who specializes in the Ethereum, Dai, and Biticoin beats in the cryptoeconomy. He's appeared in Blockonomi, Binance Academy, Bitsonline, and more. He enjoys tracking smart contracts, DAOs, dApps, and the Lightning Network. He's learning Solidity, too! Contact him on Telegram at @wmpeaster

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