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Blockchain

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Question:

Describe how the mechanism implemented in MakerDAO’s smart contract MakerVault allows crypto investors to leverage their crypto-investment.

Author: timothy Ntambala



Answer:

When the investor invests their Ether into the Makervault, they will receive back DAI in a proportion of their initial investment. This proportion depends on the collateral ratio (now 150%). With the DAI they receive back, the investor can purchase additional securities, thus creating leverage.


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