DeFi
Varun Deshpande

Do or Dai — Ride the wave of Dai price fluctuations with Nuo Network

As you are probably aware, Dai hasn’t exactly been stable lately. While the price of Dai is meant to be pegged 1 to 1 with the US dollar, Dai’s price has drifted as low as $0.95 in the past few months as more and more Dai is minted each day. In order to combat this inflation, MKR holders have voted to raise the stability fee, or interest rate owed, by CDP holders. Simply put, the mechanisms which keep Dai stable are still being explored by the community.

MakerDAO is still adjusting the stability fee…

Over the last several months, the MakerDAO has incrementally raised the stability fee from 0.5% to 11.5%. This dramatic rise in fees still hasn’t deterred CDP holders from minting more Dai. Many in the community have speculated that since most CDP holders use their Dai to essentially long ETH, CDP holders are willing to pay interest rates far higher than 11.5%. These proposed CDP holders may be willing to pay +10%, +20%, or even +50% more in fees if they believe that ETH could double overnight. This line of speculation has led to the theory that Dai may not stabilize until Multi-Collateral Dai is released. However, this remains to be seen. In the meantime, expect MakerDAO to keep tweaking the stability fee and for the price of Dai to waver.

What is Nuo and how does it relate to Dai?

Nuo is a decentralized lending platform, backed by Consensys Ventures. Nuo acts as a debt marketplace that connects lenders and borrowers from across the world using smart contracts which are non-custodial with open source. Nuo also offers margin trading powered by its Nuo loans and liquidity provided by Kyber Network and UniSwap without ever holding your funds. Non-Custodial Margin Trading enables users to Long or Short Dai using up to 3x leverage.

Besides ETH, Dai is the most highly sought after currency in DeFi. Decentralized trading and lending platforms play an important part in the MakerDAO ecosystem. Nuo Network offers unique ways to interact with Dai. There is currently over half a million Dai in Nuo’s debt reserve pool and Dai is the most actively used token on the Nuo Network.

Nuo’s margin trading feature increases the total amount of liquidity in the Dai ecosystem which helps the market’s price discovery. The increased liquidity from leveraged margin trades increases the volume of DEXs like Kyber and Uniswap which in turn helps them keep earn more fees and maintain competitive prices.

How can I use Nuo to margin trade Dai?

Using Nuo Network, you are able to long or short DAI with up to 3x leverage. As the price fluctuates, you have the potential to make profitable trades against these movements. If you expect the price of Dai to increase to $1.00, you could long Dai and potentially earn a profit if things go your way. However, if you feel that Dai is going to keep drifting lower for a while, you can short Dai and you might earn a profit.

To learn more about how to get started margin trading on Nuo, visit https://help.nuo.network/.

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