DeFi tokens up 30% as users switch to DAI stablecoin after Terra crash

Since then, the LUNA token has fallen 99.9% to $0.0000353, down 99.9% from yesterday. Meanwhile, the TerraUSD algorithm stablecoin UST has fallen 69% to $0.19 in the last 24 hours. Cryptocurrency made good on its promise to halt trading and take down tokens and stablecoins as they depreciate in value.

What exactly is Maker?

Maker is DeFi's lending protocol. Users deposit their cryptocurrency (e.g. Bitcoin or Ether) as collateral in the Maker Vault and make a DAI against it. their assets remain in the vault until they pay off the DAI.

DAI, like UST, is an algorithmic stablecoin. However, unlike the UST, it is over-collateralized. This means that when customers lock in their cryptocurrency and borrow it, they can borrow 55% to 75% of the value of the collateral in DAI. according to some experts, this model is significantly safer.

"Partially collateralized stablecoins have been failing," Nik Kunkel, former head of Maker's back-end services, said earlier this week." , they can't solve the basic problem of bank runs."

MakerDAO detailed how the vault works and why a bearish market is driving collateral liquidation to maintain those overcollateralization ratios in a Twitter conversation yesterday.

"Maker agreements are healthy, liquid and solvent with 164% collateralization and billions in solvency liquidity reserves," MakerDAO wrote in the tweet. "All DAI is overcollateralized and its hook is as strong as this decentralized protocol."