This post is for compiling a list of all Maker related terms and words that need to be defined for outsiders and newcomers to increase accessibility.
DAO - Decentralized Autonomous Organization Other names: DAC - Decentralized Autonomous Corporation, Decentralized Organization.
A DAO is a blockchain based organizational structure that has the entirety of its ownership structure and business logic defined and executed in smart contracts. Because of this it doesn't require approval by a legal framework, or intervention by any third parties, and can increase efficiency for its users and owners by cutting out middlemen.
Maker Other names: MKR, MakerDAO, MakerDao, Maker DAO.
Maker is a DAO that maintains and insures the Dai stable cryptocurrency. Maker earns money by taking an insurance fee from the users of the Dai, and funnels this money to the owners of Makercoin. In return Maker provides the service of maintaining the infrastructure of the Dai, and insuring its collateral. If the collateral backing the Dai ever becomes too low, Maker will automatically step in and buy up the bad collateral, ensuring the Dai continues to be fully collateralized.
DAI Other names: Dai, dai, DAI BOND, Dai Bond, DaiCoin
The Dai is a stable cryptocurrency backed by collateral held on the Ethereum blockchain. This collateral can be anything, including cryptocurrency, commodities or stocks, and the value of the collateral must always be higher than the value of all outstanding Dai. The Dai is initially priced around 1 SDR, but this price slowly increases over time due to deflationary yield.
MKR Other names: Makercoin, MakerShares, Maker Insurance Shares
MKR is the core token of the Maker DAO, and represents ownership in the decentralized organization and its business model. MKR holders are able to vote on Makers monetary policy, vote on upgrades to the contract system, and control the MKR Fund that finances the development and marketing of Maker and the Dai.
SDR - Special Drawing Right
The Special Drawing Right is an asset tracking a currency basket managed by the IMF, that is made up of the worlds major fiat currencies, currently USD, EUR, GBP and JPY. In 2016 CNY will also be added to the mix. The goal of the SDR is to have an asset that is optimized for international trade with minimal volatility and forex risk for those who use it for international transactions. The IMF denominates all loans it gives to member nations in SDR.
Dai Issuer
A Dai Issuer is a person that uses the Maker DAO to create new Dai. This new Dai can only be created if the Issuer locks collateral in the form of cryptocurrency or other assets on the Ethereum blockchain. The value of the collateral must exceed the value of the Dai that is being created. Issuers will issue Dai because it allows them to get more exposure to the asset they are using as collateral, which gives them leverage. It can also be because they want to use the newly issued Dai to fund something that increases the value of the asset used as collateral. In both cases issuing Dai can be considered borrowing money from Maker.
Dai Holder
A Dai Holder is a person that holds the Dai stable cryptocurrency. Usually this is either for the sake of using it as a cryptocurrency for payment, similar to how bitcoin is used. As the Dai exists on Ethereum there might be many different applications on Ethereum that accept the Dai in return for their services. The other usecase is as a low risk investment, the cryptocurrency equivalent of a government bond, due to the deflationary yield that the Dai accrues over time while still being fully insured by the Maker DAO. Due to the latter usecase the dai is also referred to as the dai bond.
Yield Other names: Deflationary yield, explicit yield, interest
Yield is the mechanism that transfers value from the Dai Issuers to the Dai Holders, in order to compensate the Dai Holders for contributing capital to the Dai Credit System. The yield is delivered in the form of Dai deflation, slowly increasing the price of Dai over time. Because of this deflationary yield, it costs an issuer more money when they want to cover their CDP and retrieve their locked collateral. It also makes it attractive for Dai holders to hold Dai, as their value goes up over time.
CDP - Collateralized Debt Position
The Collateralized Debt Position is the core component of the Dai Credit System. It is a smart contract that is able to issue Dai, by locking collateral. A CDP is created when a Dai Issuer locks an amount of collateral, and in return receives Dai. As an example, an Issuer can lock 150 USD worth of BTC in a CDP, and in return receive 100 USD worth of DAI. Later when the Issuer wishes to retrieve their collateral again, they have to pay back the amount of Dai they originally issued + the insurance rate. The price of the Dai will also have increased, so if the issuer waits 1 year before covering the CDP and retrieving their collateral they might have to pay 110 USD (in this case it means yield + insurance totals 10% for that year).
Smart Contract Other names: Contract
A smart contract is a code object on the Ethereum blockchain that can hold cryptocurrency such as DAI, ETH, or other assets, and manipulate them based on its programmed logic. A Collateralized Debt Position is a smart contract that issues Dai, and holds other assets in accordance with programmed rules that means it will only give up the assets when the Dai it originally issued is returned to it (plus an insurance fee that is sent to Maker).
CDP Cover
To cover a CDP means to "pay back" the amount of Dai that was issued with the CDP, plus paying the insurance fee to Maker, in order to retrieve the collateral that was locked in the CDP. The amount of Dai originally issued (the Issuance Amount) is destroyed and removed from circulation, reducing the total supply of Dai. The Insurance Rate, which is equal to the insurance rate * duration of the CDP * Issuance Amount
Collateral Redemption Other names: forced cover, margin call
Maker bailout
MKR forced inflation
Maker insurance
Black Swan Event Other names: Collateral crash
Emergency Debt
MKR wipeout
Dai bail-in
Insurance Shares
Vault Other names: Insurance vault, Maker vault
Buy and burn
Insurance rate Other names: Discount rate, interest rate
Maker App Other names: Maker Dapp, Dai App, Maker Wallet
Keeper
Dai Alpha
Phase One
Dai Credit System
Dai Issuer Other names: Issuer, CDP Issuer
Dai Holder
MKR Owner Other names: MKR Holder, Maker
Custodian Other names: Liquidity Providing Custodian, LPC
Intervention price Other names: Ideal price, price floor
Nexus Other names: Nexus Development
The Fund Other names: Public goods fund, MKR Fund
MKR float Other names: Outstanding MKR
Stablecoin
BitUSD
NuBits
TaiYi
Seignorage Shares
DAssets Other names: String Assets, synthetic assets
Digix Other names: DigixGlobal
OTC contract
Mist
Dynasty
Collateral Requirements Other names: Collateral point
Dai market price
Contract Free
Legal Security Gateway
MAP Other names: Maker Asset Platform
ENS Other names: Ethereal Name Spaces
Curator
Dapple
Dappsys