Hey everyone, my name is Gustav, and I am going to present how MakerDAO is currently changing the world of Decentralized Finance. I will first give a brief overview of the system, how it works, how we actually have created the technology and how it is functioning. And then I will cover some of the use cases, which are all in the decentralized finance sector.

First off, I was born and raised in Denmark. But I moved to Argentina, where I was living and working as a consultant in Information Technology for about a year and a half. This gave me a very good exposure to what it actually means to live in a country with hyper inflation. When someone told me that they got paid in DAI, which is a stablecoin, that project was Maker and soon after I was on my way back to Denmark to lead up their European business development. And now I am also covering a lot of the projects we have in Asia.

Let us start with some of the basics. Way back in 2014, Maker was founded. At that time, there was this view that to enable mainstream adoption, to build something that is used everyday by people and businesses, we needed stability. However, we wanted to create a system that maintained the original premise of what blockchain, initially in the form of Bitcoin, was supposed to be, which is a completely decentralized and open global monetary system with peer-to-peer transactions. And at the same time, we wanted it to be stable. This is more like a premise. This is very important. Decentralized stability.

Basically, we have created an ecosystem in which anyone can participate on equal terms to build new products, businesses and industries. So our general business development and partnership approach is that we are not going to sit in Denmark or in Silicon Valley and build products for emerging economies or local economies, we want to work with local entrepreneurs, we want to work with local people, we want to incentivize them to actually create value for the local economise. And they will also be the beneficiaries of it.

So of course, we keep it open source, anyone can access it. There are no restrictions on it. This also provides the necessary level of transparency that if you want to build a business, you want to be sure that there is not some ownership issue somewhere that can potentially get in your way. If you have something that is completely open, free and decentralized, then you also separate yourself from political and jurisdictional issues. So for example, a centralized stablecoin like Tether that has a bank account in the US, or maybe an offshore bank account, has a centralized point of failure. That point of failure is tied to the jurisdiction. So why should someone in the virtual economy be influenced by something that might happen in another part of the world? So we believe that if you want to create a global economic system, it should also be separated from jurisdictions.

Alright, so how do we create this decentralized stablecoin? Basically, we allow people to deposit collateral, and then based on the value of that collateral, they can take out a loan. What actually happens is that when they take up a loan or a line of credit, they actually print DAI. So we allow anyone from all over the world to actually print or remove DAI from circulation. That means that DAI has a fluctuating supply, we are currently backed by around 180,000 different positions from all over the world. So we do not have a centralized point of failure.

If the value of your positions falls below a certain threshold, we will liquidate the position and sell it in the open market. Exactly like a margin call, for example, or like a mortgage. If the price of your house drops, and you do not pay off your mortgage, the bank will sell the house to retrieve the money. Maker, however, is completely smart contract-based and permissionless.

Then we have the Maker token as the governance token. It is the underwriter of the system as well. So if you have positions that get under-collateralized, we will print more Maker tokens to sell them off in the open market, and thereby making up the under-collateralization. But at the same time, if the system functions very well and sustainably, then we will take the interest received to buy Maker tokens from the open market and burn them. So a well functioning system will have a decreasing supply over time. And a mismanaged system will have an increase in supply over time. So another aspect is that if people act sustainably and behave well, then the decrease in supply will most likely be followed by an increase in price. The Maker token holders, they vote for the risk parameters of the different collateral types, they vote for which collateral types are permissible, and they also govern the stability of the system through interest rates. This is done by having scientific conversations and discussions every week. Anyone can participate in these calls. By now we have around 100 people on the call that have a scientific conversation around the data from the past week and figure out how to move forward. It is a very, very strong crowd. We also publish that on YouTube, if you just want to listen to some of the topics we have talked about in the past.

Let us get to the use cases. So DAI is really meant to be peer-to-peer electronic cash. We promote this by having a very strong focus on developing partnerships. One of the projects already uses DAI all around the world. In Japan, unfortunately, there’s a little bit of a regulatory hurdle, so we are working very, very hard on getting approvals to be able to operate here. So hopefully early next year, we will be able to actually have Japanese projects join the Maker ecosystem.

Some of the projects operate in credit management, or secondary markets like Compound. We have lots of statistics. Maker enforces the trustlessness of the system by enabling people to do anything on the blockchain. So, you actually do not need to trust Maker as a company, because you can verify on the blockchain that everything we say is actually correct. And, of course, we are working with payments and exchanges. If we go out to projects, and we tell them about all the cool stuff you can do with this DAI stablecoin, we also need to be able to tell them that after they do all this cool stuff with DAI, they are able to convert DAI into their local currency, so that they can use it to purchase goods and services locally. So we definitely focus a lot on getting fiat connections and gateways all over the world.

Now I am going to talk a little bit about Decentralized Finance, and all that is within that space. Decentralized Finance is the ability to create and have financial services without a trusted centralized entity. We are not going to take the system that worked for hundreds of years and say “this does not work anymore”. Instead, we are improving processes with technology, and we are reducing overhead. We are increasing efficiency by removing the middleman, and also replacing a lot of manual labor with automated actions executed by smart contracts. So this is a very important topic. For example, Compound, which is the second largest DeFi protocol, allows people to to deposit DAI, and you receive currently around 8.26%, or 8.54%. So that is very, very attractive for people who use DAI to gain a bigger piece of the pie, because instead of having the bank facilitating the transaction, you have a smart contract system in the middle.

There are around 100m DAI in these protocols. It is still like a relatively small space. But so far, we only have been in our beta stage. So so far, DAI has only been collateralized by crypto assets. Later this year, we will launch “multi-collateral DAI”, where we will start adopting not only crypto assets, but also integrating legacy assets. So you could actually use tokenized bonds, stocks, commodities, real estate, etc. to deposit and print DAI.

We want to unlock the power of the blockchain to create economic empowerment. We want to take this technology that we have developed and use it for the global good, pushing it out to emerging markets and economies. And as I mentioned previously, I used to live in Argentina, where it was very helpful for me to see that the people there actually were not getting more opportunities and access. So fortunately, Argentina is actually also one of our bigger markets. Right now, DAI is actually trading at a premium, it is so popular that we cannot get enough DAI because of capital controls.

What is coming next? I have already mentioned the multi-collateral DAI. Another thing we have coming out, which will be very, very cool, is the DAI savings rate. That will be probably one of the biggest things we have developed. The DAI savings rate is basically enabling us to offer a pretty high interest rate for people holding DAI. We have enabled in the system a way for us to have a contract, so that if you let the system know you have DAI, by putting DAI into the contract, you will then receive interest similar to how you receive interest on bank deposits. This interest rate will enable anyone from anywhere in the world to access the stability that the dollar has and at the same time receive an interest rate — initially we aim for it to be at least over 3%. So we also give people a much higher interest rate than what they will receive at the banks.

The next thing we are working on are synthetic assets. Synthetic assets is a technical framework that we have applied to the Maker protocol as well, whereby we basically issue DAI pegged to other types of values. So you are not going to see only a dollar-pegged stablecoin, we will also release a EUR-pegged DAI. And hopefully, if we can get the right conversations in place with the regulators, we also want to issue a JPY-pegged DAI that also has the DAI savings rate. So you are actually going to receive quite a high interest rate on this digital asset. These are some of the things that we really want to push and use to drive mass adoption, we want to develop this by incentivizing local entrepreneurs to take on a new type of technology. We are not going to make a product for the Japanese market, for example. We want to work with Japanese companies to push the technology out and use the best that it can give to the people of Japan.

Thank you very much.