Glossary of Terms

A

Auction

  • a public sale of digital assets to the highest bidder for the purpose of maintaining the stability of the Maker Protocol. The three different types of auctions are Collateral Auction, Debt Auction, and Surplus Auction. An external actor that bids in an Auction is called a Keeper.

B

Black Swan

  • an unprecedented, unexpected, and catastrophic event that can result in a Collateral asset losing a significant amount of value

C

Collateral

  • assets locked in a Vault

Collateral Auction

  • a type of auction that serves as a means to recover generated Dai from Liquidated Vaults

Collateral Claims

  • the amount of redeemable collateral Dai holders and Vault owners have claim to in the event of an Emergency Shutdown

Collateralization Ratio

  • the ratio between a Vault's collateral and the Dai generated by that Vault

Continuous Approval Voting

  • a voting design that involves leaving your vote in the governing proposal, moving your vote only when you wish to support a new proposal

D

Dai

  • USD pegged decentralized stablecoin of the Maker Protocol

Dai Savings Rate

  • a variable return that is earned by holding Dai in the DSR smart-contract

Debt Auction

  • a type of auction that serves as a means to recapitalize the system by auctioning off MKR for a fixed amount of Dai

Debt Ceiling

  • the maximum amount of Dai that can be generated in the Maker Protocol per collateral type

Decentralized Risk Management

  • the cooperative interaction between Maker Token Holders and all Risk Teams to manage risks in MakerDAO

Development Fund

  • another name for the Maker Foundation’s multisig wallet that contains MKR, which is sold for operational expenses

Dilution

  • an increase in the amount of MKR in circulation resulting from a Debt Auction

E

Emergency Shutdown

  • a security feature that allows the system to shut down and make underlying collateral available for redemption by Vault owners and Dai holders

Executive Vote

  • a continuous approval vote that executes changes in the system if passed

F

Feed

  • an organization or individual that runs a price-feed that is used the Maker Protocol's Oracle system

G

Generated Dai

  • the amount of Dai generated against one's collateral using a Maker Vault

Global Debt Ceiling

  • the maximum amount of Dai that can be generated in the Maker Protocol

Governance Facilitator

  • an elected role that is responsible for supporting MakerDAO's governance process

Governance Poll

  • a time-based vote to gather soft consensus

Governance Portal

  • a front-end application that allows you to interact with MakerDAO's on-chain governance

Governance Security Module

  • a security feature of the Maker Protocol that delays certain governance actions by a predetermined amount of time

H

I

Interim Risk Team

  • the first Risk Team whose role is to help bootstrap the Decentralized Risk Management function

J

K

Keeper

  • external actors who perform various functions in the Maker Protocol

L

Liquidation

  • an automated sale of a Vaults collateral to cover its Generated Dai balance

Liquidation Penalty

  • a penalty fee that's applied to a Vault's Generated Dai balance when it is liquidated

Liquidation Price

  • lowest price per unit of collateral before a Vault is vulnerable to liquidation

Liquidation Ratio

  • a risk parameter defining the minimum Collateralization Ratio below which a Vault is vulnerable to liquidation

M

Maker Foundation

  • the organization that was created to develop and bootstrap the Maker Protocol

Maker Protocol

  • a name that describes the entire smart-contract system of MakerDAO, also known as Multi-Collateral Dai

Market-Maker

  • an agent that provides liquidity to a market by offering both bids and asks at a spread for a given asset

MCD

  • acronym for Multi-Collateral Dai

MKR

  • governance token of MakerDAO

Multi-Collateral Dai

  • the upgraded Maker Protocol that facilitates the use of multiple collateral types in Vaults

N

O

Oracle

  • a mechanism which makes off-chain data, such as price data, available on-chain for use in smart-contracts

Oracle Security Module

  • a security mechanism that delays and publishes the reference price produced by the Oracle System

P

Peg

  • referring to a fixed exchange rate between two given assets. In the Maker Protocol, Dai maintains a "soft peg" of 1 Dai to 1 U.S. dollar.

Price-Feed Delay

  • a risk parameter that controls the delay of the reference prices published by the Oracle system

Proposal

  • a written plan put forward for a vote

Q

R

Reference Price

  • the published price of an asset that is produced by the Maker Protocol's Oracle system and that is used for calculations in the Maker Protocol

Risk Construct

  • a collection of data, risk models, outputs, documentation, and analysis

Risk Model

  • an analytical model measuring and predicting risk, including the input data and output of the model

Risk Parameters

  • a set of configurable, risk-related, variables used to manage the system

Risk Team

  • an independent party who creates a Risk Construct and proposes Risk Parameters to MakerDAO Governance

S

Sai

  • a stablecoin similar to Dai that was produced from the Single-Collateral Dai version of the Maker Protocol

SCD

  • acronym for Single-Collateral Dai

Single-Collateral Dai

  • the former version of the Maker Protocol which solely accepted ETH as collateral

Soft-peg

  • relating the target value of an asset to the absolute value of a fiat currency, allowing for some variance

Stability Fee

  • a variable Fee charged to a Vault for the generation of Dai, set by MKR holders through the governance of the Maker Protocol

Surplus Auction

  • a type of auction that serves as a means to sell a fixed amount of surplus Dai in the system in exchange for MKR that is then burned

T

Time-Based Voting

  • a voting design that ends a vote at a predetermined time

U

V

Vault

  • a core component of the Maker Protocol that facilitates the creation of Dai against locked up collateral, there are different Vault types users can utilize

Vote Proxy Contract

  • a smart-contract that makes linked wallet voting possible, allowing MKR token holders to vote with their hot wallets using MKR that is stored on their cold wallets

Voting Contract

  • a smart-contract that allows MKR holders to vote with their tokens

W

X

Y

Z