MakerDAO is a self-governing protocol, and the native MKR token allows token holders to make changes to the Maker Protocol through a voting process which is written in a smart contract. These changes include:
- What should be the stability fee (or the annual borrowing rate)?
- How much collateral should back a CDP?
- To shut down the protocol in the case of a flash crash of the collateralized asset or any other emergency.
The MKR token holders interact with the voting smart contract, and their vote is permanently recorded on the MakerDAO’s blockchain for complete transparency. This contract records the votes weighted in proportion to the number of tokens each voter uses. This means the larger holders have a greater influence on the decisions. After collecting the votes, MakerDAO’s voting smart contract processes the vote results.
Again, another smart contract called “spell” is deployed to implement the changes decided by the contract. As of now, one of the members of the Smart Contract Team develops the contract. However, as the project progresses to become a truly decentralised platform, this process will be made automatic to remove a single point of failure from the system.
More Complex Use Cases of Smart Contracts
The use cases of smart contracts go beyond just simple payment transactions and can be used in a wide range of fields, including medical, entertainment, and prediction markets.
Medical Trials
During medical trials, a patient visits different healthcare centres and carries all the documents physically to make it easier for doctors to understand the medical history. Smart contracts can ease up the hassle by offering 360 degree visibility of the data of a patient.
Prediction Markets
A prediction market is essential to gain valuable insights regarding public opinion about a campaign or an organisation. Smart contracts can record the predictable outcome of events transparently to get accurate forecasts.
Entertainment
Smart contracts can enable rights for the content in the entertainment industry to remove plagiarism and piracy by watermarking media content. As soon as someone tries to steal the data, the legit owner will know immediately.
Smart Contracts will seem alien to anyone that has no concept of how blockchains function. Once, however, you appreciate the way that blockchains can achieve consensus on data management without a central authority, the additional layer of complexity and logic that Smart Contracts seems both a natural progression and an exciting way to bring the benefits of blockchain technology to so many areas of our lives.
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