MakerDAO Tokens Explained: DAI, WETH, PETH, SIN, MKR. Part 1

Maker DAO uses multiple ERC-20 tokens for specific purposes to ensure DAI stable coin stability. This article describe their roles and usage patterns based on Bloxy.info token flow tool.

Maker DAO Tokens

Maker DAO system consists of several smart contracts ( Sai Tap, Sai Tub, Vox, Medianiser, etc.), and ERC-20 tokens. Together they work to ensure the stability of DAI token.

In this article we mostly focus on how tokens are rotated, and used. The diagram below shows the main token flows and smart contract methods, used to convert one token to another:

Maker DAO Tokens Turnaround and Contract Methods

Tokens are shown as circles, while smart contracts and their entities are rounded rectangular. The arrows on the diagram means that using these smart contract methods you can change the balance from one token to another.

For example, calling join() will remove WETH tokens from you and give you appropriate amount of PETH tokens instead.

Unstable ( “Ether”-like) Tokens

The left side of the diagram shows tokens, related to Ether:

Ether

Ether itself is not directly used in Maker DAO system. If you have Ether originally ( as most of us ), you have to first convert it to WETH ( Wrapped ETH ) token.

WETH is one-to-one reflection of ETH, but as ERC-20 token. In any moment you can change Ether to WETH and back. The downside is that every such transformation requires gas.

PETH is short for “Pooled Ether”. When you deposit WETH to Maker DAO, you get back this token. Note, that It is not exactly one-to-one to Ether, it rate is calculated.