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What do you get when you cross POA Network with Maker DAO?

POA Network and Maker DAO have partnered to create xDai – the world’s first blockchain to use a USD pegged coin as its native token.

More specifically, it’s a POA sidechain which now lets users import Dai to a more scalable and utilitarian ERC20 environment.

So, what does that mean?

What it means

POA Network

POA Network is a proof of authority variation of Ethereum.

  • Proof of work (PoW) blockchains like bitcoin secure the network by requiring nodes (miners) to show their work. That work takes the form of equations solved by mining machines.
  • Proof of stake (PoS) blockchains secure the network by requiring nodes to show their stake. This stake takes the form of certain cryptocurrency holdings.
  • Proof of authority (PoA) blockchains secure the network by requiring nodes to show their authority. In the case of POA Network, this authority takes the form of being a US public notary, whose identity is made publicly available.

By doing away with the need to show work or demonstrate a stake, instead replacing it with a system of (presumably) trusted validators, POA Network can handle transactions much more speedily than Ethereum, which is currently still PoW.

At the same time, POA Network is essentially a variation of Ethereum, providing a lot of familiarity and transferrability for dapp developers who might want to test or move into a more scalable environment.

Maker DAO

Maker DAO is a paired stablecoin system consisting of the MKR token and the USD-pegged Dai stablecoin. It runs on the Ethereum blockchain.

The MKR token might fluctuate, but the Dai token remains stable as smart contracts automatically liquidate or buy Ethereum reserves to ensure full backing for the Dai token.


The two projects met in the middle on a separate blockchain of their own, called xDai Chain. While POA Network is a modified variation of Ethereum, xDai Chain is a modified variation of POA Network.

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It retains features like the nippy five second block time and similar, but significantly allows for the use of Maker’s Dai on this second blockchain, rather than just the volatile native POA token. Now Dai can be transferred across from the Ethereum blockchain to the xDai blockchain, while retaining its backing on the Ethereum blockchain, and therefore its value.

Basically, you now have a reliable US dollar-pegged stablecoin on a much speedier Ethereum-like platform. Functionally this means gas fees can be denominated in USD (technically they’re denominated in xDai, but you get the idea), developers can more easily see how much their contracts will actually cost and dapps can be created that make use of a USD-pegged coin.

“{xDai Chain provides an exciting and new platform for the community and DApp developers,” says Igor Barinov, tech lead of POA Network. “The premise of a stable coin based blockchain opens up endless possibilities for developers and applications. Using the different tools POA Network has created, users can bridge their Dai to the new xDai Chain and start using a single token for their transactions while making use of the benefits of a PoA based sidechain.”

“With xDai Chain, POA created a full tool kit for DApp developers looking to improve the end user experience by allowing people to transact with high scalability and pay gas fees in a single token,” said Rune Christensen, CEO and co founder of MakerDAO. “xDai Chain creates an awesome opportunity for developers to launch DApps with Dai as the medium of exchange.”


Source: Finder.com.au