As the cryptocurrency bear market continues, investors are looking for much-needed predictability. Stablecoins have risen in popularity as the market tumbles. Several have emerged, but few are as transparent as MakerDao. Maker had Espeo Blockchain testers check to make sure everything worked properly before they launched. Since the technology is so new, blockchain testing is vitally important for any project if you want to keep the trust of this fickle market.
Cryptocurrency is having a bit of an identity crisis lately. Some extoll utopian notions of freeing consumers from banks, while others see a way to make money. It was this unregulated asset speculation that spurred investors to flock to cryptocurrency late last year. Unsurprisingly, speculation in such a constrained asset class caused wild volatility in the market.
Market volatility, of course, is not good if you’d like to actually use cryptocurrency as a currency. One solution to this is the stablecoin. Stablecoins are crypto tokens with fiat currency or other more stable assets backing them. Similar to pegging a weak currency to a stronger one, stablecoins ideally lend confidence to those who hedge with them.
Centralization and dubious fiat backing are some current criticisms of stablecoins on the market. Users have to trust a central authority that the company issuing the tokens actually has the funds. But just like pegged fiat currency, stablecoins introduce much-needed confidence into the token economy.
Espeo Blockchain helped MakerDao with blockchain testing before launch. Unlike other stablecoins, Maker issues their Dai tokens using smart contracts in exchange for Ethereum. Head of business development, Gregory DiPrisco wrote in a company blog post from earlier this year that Maker operates in a similar way as a bank, just without the middlemen. The platform aims to introduce stability into the cryptocurrency market with its Dai token. Ether collateral backs each token. MakerDao reduces volatility and allows users to maintain their purchasing power with crypto assets.
“Pretend you are at the bank asking for a home equity loan. You put up your house as collateral and they give you cash as a loan in return… just replace your house with ether, the bank with a smart contract, and the loan with Dai.”
Of course, just as the bank might take your house if you can’t repay the loan, Maker automatically resells ethereum collateral if it drops below the value of the Dai loan. This mechanism maintains the integrity of the system and keeps the price stable. As prices drop, though you might think that the system would unravel. Mike Porcaro, head of communications at Maker remains positive, however. In an email interview, he said:
“Maker is unlocking the power of the blockchain for everyone by creating an inclusive platform for economic empowerment — allowing equal access to the global financial marketplace… The currency lives completely on the blockchain; its stability is unmediated by any locality, and its solvency does not rely on any trusted counterparties.”
Collateral debt position
MakerDao’s CDP portal holds a surplus of collateral in publicly auditable Ethereum smart contracts. Users can use Dai tokens in the same way as any other crypto. Users can send Dai to others, pay for goods and services, or save them long-term. Creating a Collateral Debt Position (CDP) allows users to protect their ETH assets with Dai stablecoins. Porcaro went on to say:
“People or organizations create Dai by locking-up ETH in a CDP. As long as people can open CDPs there will be Dai in circulation. [Maker is] seeing increased volumes of Dai in circulation. In fact, about 1.5% of total ETH is locked up in Dai smart contracts.”
The hope is that the system will encourage more people to use cryptocurrency as a medium of exchange. Stability is essential to achieve this.
Espeo Blockchain helped MakerDao with blockchain testing before it went live. Checking how usable the platform is, and the security of the smart contract code is critical in a blockchain project. This process ensures that the system functioned properly before people started putting their money in. Head of product, Soren Nielsen agreed to hire Espeo when his team needed assistance with testing the MakerDao platform. Peters explained in an email interview:
“We needed immediate assistance with testing a product, [so] we decided to “test the waters” with Espeo… A challenge we currently have in general when engaging new suppliers is that there is a steep learning curve unless you’re already a user of our system… I felt that we had a professional client-supplier relationship. It certainly was good to have a dedicated project manager following this from Espeo.”
Finding bugs to fix
Project manager Natasza Stanicka and testers Bartosz Kuczyński and Patryk Jaruga got to work trying out every aspect of the platform looking for bugs to fix. They had to methodically sift through every feature and behave just as a regular user would. Kuczyński recalled:
“First, we clicked through every clickable item and went through every user story and tried to find edge cases. I guess the challenge with that was the fact that it is a blockchain application and that has certain consequences in itself. We needed to make sure that it actually cooperates with the blockchain correctly and the results were accurate.”
Jaruga remembers finding a bug which interrupted Ethereum transactions between hardware wallets. He said that every device behaved a bit differently in transactions and that they tested the Maker platform with a range of hot and cold wallets. The Maker team fixed the bugs as soon as they knew about them, said Bartosz Kuczyński. He added:
“Maker’s development team was really interested in bug reports, and they dealt with them immediately. In that respect, I believe this was really very ‘well-oiled.’ The bugs were corrected immediately so we would be able to move on to the next thing. The overall attitude of the company was certainly very positive.”
Testing such a complex application ensured a successful launch. Since MakerDao relies on consumer trust, getting the calculations right is vitally important. Blockchain testing involves a lot of things. Tokenomics, UI/UX, and hardware compatibility are some of the aspects our testers analyzed. In order to maintain the integrity of the token system and preserve the public’s trust, making sure the app works as promised was essential.
Dai stablecoins and the MakerDao infrastructure goes a long way to stabilize the cryptocurrency ecosystem. For more people to adopt crypto and start using it as a medium of exchange, easing price volatility and uncertainty have to happen. Dai’s stability helps users hedge their Ethereum assets and protect their investments from wild swings in the market. Blockchain testing ensured the platform worked properly before launch. More than anything else, confidence in blockchain technology will encourage wider adoption. Knowing that you won’t lose everything overnight will spur more people to start using cryptocurrency.