Maker Dai: Stable, but not scalable

A lesson in stablecoin arbitrage

Hasu

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By Su Zhu and Hasu

The least understood thing about stablecoins is how they come into existence. Who creates the supply of Tether, USDC or Dai that you can buy on your favorite exchange? We will take a look at how professional arbitrageurs expand and contract the supply of a stablecoin based on the current demand of the market, how Dai’s model is different and why the lack of a professional arbitrage model makes Dai fundamentally unscalable.

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