Ether Deflation as Caused by MakerDAO (Part 1)

Deepit AG
2 min readSep 20, 2018

I have already talked about the Dai and MakerDao phenomenon in previous article and today I will go into more depth to analyze the existing relationship between Ether and Dai, bringing to light the following fact:

The actual monetary deflation, that is to say the decrease in the volume of Ether circulating which the contracts linked to DAI are bringing to the total amount of Ether.

Let’s start with the global figures:

I have tried to summarize the overall data in a single image, since DAI came into being, i.e. from December 18, 2017. 274 days have passed (as I write this, it is September 18, 2018) and 747,516.69 Ether, or 2728.89 Ether per day have been secured in the various CDP (“Collateralized Debt Position”) have seen the securing of 747,516.69 Ether, or 2728.89 Ether per day. You can check this by using this link.

In the very same 274 days the ether inflation caused by the mining activity amounted to approximately 5,818,546 Ether or 20,506,37 Ether per day.

This means that 13.74% of the monetary inflation caused by the new mined ethers in the last 274 days has been absorbed by the various CDPs to guarantee the DAIs.

If we take into account that:

  1. the DAI project is in its infancy and currently there is only one stablecoin created with this system, the U.S. dollar, however many more will be created.
  2. By the end of the year Ether’s monetary inflation will decrease significantly (by 33%), from 3 Ether per block to 2 Ether per block plus a reward for uncle blocks.

We can understand the enormous deflation potential of the DAI project regarding Ether, and in perspective on all those tokens that will be accepted as additional collateral. here are no limits to the type of stablecoin that can be guaranteed on the Ethereum Blockchain: in the future we will see in addition to the main currencies, metals and stock prices. This is a market with an infinite capitalization, and several orders of magnitude greater than that of Ethereum as a whole.

For this reason MakerDAO today is without a doubt ethereum’s Killer Dapplication, as well as being probably the Killer Dapp of the entire environment related to the concept of Blockchain.

Stay connected, in the next article I will analyze the behavior of the market and the DAI collateral during the phase of collapse for the Ether price in U.S. dollars.

Author: Paolo Rebuffo, CTO @Deepit AG

Originally published at on September 20, 2018.



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