How to Mint and Redeem DAI on MakerDAO

Detailed Instructions

First, you need a self-custodial Web3 wallet like MetaMask, Coinbase Wallet, or Rabby. Ensure it's funded with Ethereum (ETH) to pay for gas fees. Next, navigate to the official MakerDAO Oasis App at app.oasis.app. Connect your wallet by clicking the 'Connect Wallet' button and approving the connection request. It's crucial to verify you are on the correct website to avoid phishing scams. Once connected, your wallet address will be displayed. You will use this interface to manage your Vault, which is the smart contract that holds your collateral and generates DAI.

• Sub-step 1: Install and fund a Web3 wallet browser extension.
• Sub-step 2: Navigate to app.oasis.app and connect your wallet.
• Sub-step 3: Verify the connection and ensure you have a small amount of ETH for transaction fees.

Tip: Bookmark the official Oasis App URL and double-check the domain before connecting. Consider using a hardware wallet for enhanced security when managing significant amounts.

Detailed Instructions

MakerDAO accepts various collateral assets like Wrapped Ethereum (WETH), stETH, or wstETH. In the Oasis App, click 'Borrow' and then 'Open a Vault'. You'll be presented with a list of available collateral types. Each has a specific Stability Fee (interest rate) and Liquidation Ratio. For example, the ETH-A vault type might have a 150% minimum collateralization ratio. Select your preferred type and click 'Open Vault'. This action will trigger a blockchain transaction; confirm it in your wallet and pay the gas fee. Your new Vault will be assigned a unique numerical ID. This Vault is now an empty container ready to receive your collateral.

• Sub-step 1: From the 'Borrow' section, select 'Open a Vault'.
• Sub-step 2: Review and choose a collateral type (e.g., WETH-A).
• Sub-step 3: Confirm the transaction in your wallet to deploy the Vault contract.

Tip: Research current Risk Parameters on makerburn.com. Start with a conservative collateral type like ETH-A for lower risk, and always deposit more than the minimum to create a safety buffer.

Detailed Instructions

With your Vault open, navigate to its management page. Under the 'Deposit' section, enter the amount of collateral you wish to lock, for instance, 10 WETH. Approve the token contract to spend your WETH if it's your first time, then confirm the deposit transaction. After depositing, you'll see your Locked Collateral and Collateralization Ratio. To generate DAI, go to the 'Generate' section. Here, you must decide your Debt Ceiling and Liquidation Price. Enter the amount of DAI you wish to mint, ensuring your resulting collateralization ratio stays well above the Liquidation Ratio (e.g., 200% for safety). Click 'Generate' and confirm the transaction. The newly minted DAI will be sent to your connected wallet address.

javascriptCopy
// Example: Interacting with a Vault via Maker's DSProxy
function generateDai(uint vaultId, uint wad) public {
    manager.frob(vaultId, 0, wad); // 0 collateral delta, positive DAI delta
}

• Sub-step 1: Deposit your collateral asset (e.g., WETH) into the Vault.
• Sub-step 2: Calculate a safe amount of DAI to generate, maintaining a high collateralization ratio.
• Sub-step 3: Execute the 'Generate' transaction to mint DAI to your wallet.

Tip: Use a Collateralization Ratio Calculator on the Oasis App. Never mint up to your maximum limit; a ratio below 150% for ETH-A will trigger liquidation.

Detailed Instructions

To reclaim your collateral, you must repay the minted DAI plus the accrued Stability Fee. In your Vault, go to the 'Pay Back' section. You need DAI in your wallet; you may need to acquire it from an exchange. Enter the amount of DAI to repay. Repaying all debt will allow you to withdraw all collateral. Alternatively, you can partially repay to improve your collateralization ratio. After repaying, go to the 'Withdraw' section to unlock and send your collateral back to your wallet. Confirm both transactions. The process for redeeming DAI for other assets (like USDC) is different and done via the PSM (Peg Stability Module) on the Oasis 'Trade' interface, swapping DAI 1:1 for other stablecoins.

bashCopy
# Example command to check your Vault's status via CLI (conceptual)
$ makerdao-cli --vault 1234 info
> Collateral: 10.5 ETH
> Debt: 5000 DAI
> Ratio: 210%
> Liquidation Price: $1,200

• Sub-step 1: Ensure your wallet holds the DAI amount you wish to repay.
• Sub-step 2: Use the 'Pay Back' function to reduce your Vault debt.
• Sub-step 3: Use the 'Withdraw' function to retrieve freed collateral.

Tip: Monitor your Liquidation Price regularly. Consider setting up alerts with tools like DeFi Saver. Remember, redeeming DAI for collateral is a two-step process: repay debt first, then withdraw.

Detailed Instructions

First, you must connect a Web3 wallet like MetaMask to the official MakerDAO interface at Oasis.app. Ensure your wallet is on the Ethereum Mainnet. For minting DAI, you need to have approved collateral assets in your wallet. The most common is Wrapped Ethereum (WETH), but others like WBTC or staked ETH (stETH) are also supported. You must have sufficient ETH to pay for gas fees for all transactions.

• Sub-step 1: Navigate to Oasis.app and click 'Connect Wallet'. Select your wallet provider and authorize the connection.
• Sub-step 2: Verify your wallet's network is set to Ethereum Mainnet. If not, switch networks within your wallet extension.
• Sub-step 3: Ensure you hold enough of your chosen collateral asset (e.g., 5 ETH worth of WETH) and a small amount of ETH (e.g., 0.05 ETH) to cover transaction gas costs.

Tip: Bookmark the official Oasis.app URL to avoid phishing sites. Always double-check contract addresses if interacting directly.

Detailed Instructions

On Oasis.app, navigate to the 'Borrow' section and select your desired collateral type (e.g., 'ETH-A'). Click 'Open Vault'. This action deploys a new, unique Maker Vault (a smart contract) tied to your wallet address. You will then deposit collateral into this vault. The system will show you the collateralization ratio, which must stay above the liquidation ratio (e.g., 150% for ETH-A) to avoid being liquidated.

• Sub-step 1: Select 'ETH-A' and click 'Open Vault'. Confirm the wallet transaction, paying the gas fee.
• Sub-step 2: In your new vault interface, enter the amount of WETH to deposit (e.g., 10 WETH). Click 'Deposit' and confirm the transaction.
• Sub-step 3: After confirmation, verify your vault's status shows the deposited collateral amount and a 'Collateral Ratio' of infinity (as no debt is generated yet).

Tip: Start by depositing less than your total holdings to maintain a safety buffer. The vault's address will be a unique contract like 0x123...abc.

Detailed Instructions

With collateral locked, you can now generate DAI. This creates debt in your vault. You must mint an amount that keeps your vault's Collateralization Ratio safely above the Liquidation Ratio. For ETH-A, the minimum is 150%, but a higher ratio (e.g., 200%) is safer. The Stability Fee (an annual interest rate) will begin accruing on your debt immediately. You can specify the exact DAI amount to generate.

• Sub-step 1: In your vault, find the 'Generate DAI' field. Enter an amount (e.g., 5000 DAI). The interface will calculate and display your new projected collateralization ratio.
• Sub-step 2: Ensure the new ratio is significantly above 150%. If 10 WETH is ~$30,000, 5000 DAI gives a 600% ratio.
• Sub-step 3: Click 'Generate' and confirm the transaction in your wallet. The minted DAI will be sent to your connected wallet address.

codeCopy
// Example transaction data for generating DAI
function: frob(bytes32 ilk, int256 dink, int256 dart)
// dink: change in collateral (0 for just generating)
// dart: change in debt (positive to generate DAI)

Tip: You can use the 'Max' button to see the maximum DAI you can draw at the current collateral price, but borrowing the max is risky.

Detailed Instructions

To redeem your collateral, you must first repay the DAI debt plus any accrued Stability Fee. You need the DAI in your wallet. Go to your vault on Oasis.app and use the 'Pay Back DAI' function. After repaying all debt, your vault will be debt-free, and you can withdraw your collateral. This two-step process (repay then withdraw) is the core of redemption.

• Sub-step 1: Ensure your wallet holds the DAI you need to repay (e.g., 5000 DAI plus a small amount for accrued fees). You may need to approve the DAI token for the Vat contract first.
• Sub-step 2: In your vault, enter the DAI amount to repay (or click 'Pay Back All') and confirm the transaction.
• Sub-step 3: Once debt is zero, the 'Withdraw' button for your collateral will activate. Enter the amount (e.g., 10 WETH) and confirm. The WETH will be returned to your wallet.

codeCopy
// Example transaction for repaying debt and freeing collateral
function: frob(bytes32 ilk, int256 dink, int256 dart)
// dink: negative to withdraw collateral
// dart: negative to repay DAI

Tip: Always check for any outstanding stability fees in the vault details. The total to repay might be slightly more than your principal DAI debt.