How to be your own bank with FiatDex and the DAI stablecoin
FiatDex is a decentralized fiat to DAI swap process that removes any dependency on an external 3rd party while still remaining trustless. DAI is an Ethereum based stablecoin, supported by the MakerDAO foundation, that is designed to be decentralized and designed to float to the USD 1:1.
Benefits of being your own bank:
The most significant benefit of being your own bank is that you are in complete control of your money. You can withdraw or deposit at any time and your funds cannot be locked up by central administrators who may have malicious intent.
Cross border payments also become easier when you are your own bank. There are no more customs fees associated with sending payments anywhere in the world and no restrictions.
Cryptocurrency gives you the ability to be your own bank but their price instability makes them less than ideal for long term storage. The DAI stablecoin removes that instability and allows you to rest easy knowing that the value of your coins today will be the same next week. In many countries, there is significant price instability in their fiat currencies that makes it more ideal to hold DAI over fiat. For example in Argentina, because inflation has skyrocketed recently, holding Argentine pesos in your bank account or in your house, you are actually losing purchasing power over time.
Additionally, by being your own bank with DAI stablecoin, you can participate in decentralized lending pools to earn anywhere between 1–10% interest on your DAI per year, significantly more than a typical bank account.
Getting Started With Alice
Let’s say Alice is a person who wants to start the journey to become her own bank. She is from a country that has hyperinflation and she wants to maintain the value of her money by switching over to having mostly DAI.
To get started, she will first need to bootstrap herself by buying some DAI from a local centralized cryptocurrency exchange. She decides to buy 500 DAI with her fiat currency.
Enter FiatDex
Alice decides she wants to have 80% DAI and 20% fiat in her portfolio. She finds the FiatDex open-source Github online and downloads the repository onto her computer so that she can run the protocol even if the website goes off-line. She finds matching offers on the offer book in the FiatDex Marketplace and buys 300 DAI with her fiat currency using 450 DAI as collateral repeatedly until she has 80% DAI in assets.
Compounded Interest
Alice doesn’t just keep her DAI in a wallet, she makes her money work for her. She deposits her DAI into a decentralized lending pool to start earning up to 10% interest. Meanwhile her fiat continues to decrease in value due to ongoing inflation but she keeps it because it is highly liquid and is used to make everyday purchases.
Out of Fiat
Alice has ran out of fiat because she used her last amount to make a large purchase. She can now use the FiatDex Marketplace to create a sell DAI offer to obtain more fiat. Once she finds a trading partner, she can then use the FiatDex protocol to sell her DAI for fiat currency to restore her 20% fiat. All done without needing to utilize a third party or centralized gatekeeper. All done privately between two people in a trustless way.
Gig Economy
Alice does freelance work where she is paid in fiat cash for her work. Because she doesn’t like to have too much cash on her and because her fiat decreases in value with each day, she decides to convert most of the money she makes into DAI. She uses the decentralized FiatDex protocol to buy more DAI with her fiat while using some of her saved DAI as collateral in the protocol. She then puts that DAI into a decentralized lending pool to make it work for her.
Worst Case Scenario
Alice goes to bed and her country erupts in massive unrest and civil war overnight. Her country’s unstable monetary system collapses and her fiat becomes basically worthless. She wants to leave the country but is unable to do so with the fiat that she has because its value is nearly zero.
She decides to tap her own DAI bank and use her DAI to buy a plane ticket out of the country. She then enters a much more stable country. She will still need fiat here to do everyday purchases so she again uses the decentralized FiatDex protocol to convert 20% of her assets into fiat. The problems in her previous country have had limited effects on her savings because she stored most of her savings as DAI stablecoins.
A Hedge Against Instability
FiatDex with DAI stablecoin give people around the world the ability to take control of their money and protect themselves from monetary collapse while at the same time supporting practical uses for fiat currencies.
FiatDex removes the gatekeepers on fiat to allow for a completely decentralized swap process between cryptocurrency and fiat currencies around the world.
Learn more here:
FiatDex Website
FiatDex Github
FiatDex Telegram
