The Maker protocol is one of the foundational pillars of decentralized finance (DeFi), enabling users to generate DAI—a dollar-pegged stablecoin—by depositing crypto assets as collateral. In this comprehensive guide, we’ll walk you through how to borrow using MakerDAO via the Oasis app, from setting up your vault to managing debt and withdrawing collateral. Whether you're new to DeFi or looking to deepen your understanding, this step-by-step tutorial ensures you can navigate the process with confidence.
Understanding MakerDAO and Its Core Components
MakerDAO operates as a decentralized autonomous organization (DAO) built on the Ethereum blockchain. It allows users to borrow DAI without intermediaries by locking up digital assets in smart contract-powered vaults.
Two native tokens power the ecosystem:
- DAI: A decentralized stablecoin soft-pegged to the US dollar, used as borrowed currency.
- MKR: The governance token that grants holders voting rights over protocol changes and risk parameters.
The system relies on collateralized debt positions (CDPs), now known as Maker Vaults, where users deposit supported cryptocurrencies like ETH or WBTC to generate DAI. These vaults are governed by strict risk rules to maintain DAI’s stability.
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Introducing Oasis App: Your Gateway to MakerDAO
Oasis.app is the official user interface for interacting with the Maker protocol. It simplifies complex DeFi operations into intuitive actions across three primary features:
- Borrow: Create a vault, deposit collateral, and generate DAI.
- Trade: Swap tokens directly within the platform using integrated decentralized exchanges.
- Save: Earn passive income by depositing DAI into the Dai Savings Rate (DSR) contract.
This guide focuses on the Borrow feature—the most widely used function for accessing liquidity without selling your crypto holdings.
Step-by-Step: How to Borrow DAI Using a Maker Vault
Step 1: Access the Borrow Interface
Visit oasis.app and click on Borrow. You'll be directed to the borrowing dashboard where you can begin creating your vault.
Step 2: Connect Your Wallet
Oasis supports multiple wallets, including MetaMask, Ledger, and Trezor. For this walkthrough, we’ll use MetaMask:
- Click Connect Wallet.
- Select MetaMask from the options.
- Approve the connection in your wallet extension.
Once connected, the interface displays your wallet balance and available collateral types.
Step 3: Choose Your Collateral Type
MakerDAO supports various collateral types, each with different risk parameters. Common options include:
- ETH-A (Ether)
- WBTC-A (Wrapped Bitcoin)
- UNI-V2-DAI-USDC (Uniswap V2 LP tokens)
For this example, let’s select ETH-A, which offers high liquidity and broad support.
Key metrics displayed:
- Stability fee (interest rate)
- Liquidation ratio (minimum collateral requirement)
- Available DAI generation limit based on your ETH balance
Step 4: Open Your Vault
Click Get Started, then Setup Vault. This triggers a transaction in MetaMask to initialize your vault. Confirm the transaction—note that gas fees apply.
After confirmation, your vault is live but empty. Now it’s time to deposit collateral.
Step 5: Deposit Collateral and Generate DAI
Enter the amount of ETH you’d like to deposit. The app automatically calculates:
- Maximum DAI you can generate
- Current collateralization ratio
⚠️ Important: You must generate at least 100 DAI per vault. Also, always keep your collateralization ratio above the liquidation threshold—typically 150% for ETH-A—to avoid automatic liquidation if prices drop.
For safety, aim for a ratio of 200–300% or higher during volatile markets.
Select your desired DAI amount (less than the max), then click Generate DAI. Confirm the transaction in MetaMask.
Step 6: Receive DAI in Your Wallet
Once confirmed, the generated DAI appears in your connected wallet—usually within seconds. You can now use it for trading, payments, or further DeFi strategies.
Managing Your Vault: Pay Debt and Withdraw Collateral
Monitor Your Position
Regularly check your vault status via the Overview tab. Key details include:
- Vault ID
- Locked ETH amount
- Generated DAI
- Collateralization ratio
- Outstanding debt + accrued stability fees
The protocol uses real-time price oracles to monitor collateral value. If your ratio falls below the liquidation threshold, your position becomes vulnerable.
Repay Debt and Unlock ETH
To close your position:
- Go to your vault.
- Click Pay Back.
- Enter the amount of DAI you wish to repay.
- Approve the transaction in MetaMask.
After full repayment, click Withdraw to reclaim your ETH. Confirm again in MetaMask, and the funds return to your wallet.
Advanced Feature: Multiply Your Position
Oasis offers a powerful tool called Multiply, allowing you to leverage your ETH:
- Deposit ETH.
- Borrow DAI against it.
- Use DAI to buy more ETH.
- Repeat—up to ~2x leverage.
This creates a leveraged long position, amplifying gains (and risks). Ideal for bullish market outlooks—but use caution during high volatility.
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Frequently Asked Questions (FAQ)
Q: What happens if my vault gets liquidated?
A: If your collateralization ratio drops below the liquidation threshold, the system auctions off part of your collateral to repay debt. You lose assets plus a penalty fee—so always monitor your ratio.
Q: Can I use multiple vaults?
A: Yes. You can open multiple vaults with different collateral types or strategies (e.g., one for ETH, another for WBTC).
Q: Are there interest rates on borrowed DAI?
A: Yes. The stability fee acts as an interest rate and varies by collateral type. It accrues over time, so longer loans cost more.
Q: Is my DAI insured?
A: No. While MakerDAO is audited and battle-tested, smart contract risk exists. Never deposit more than you can afford to lose.
Q: Can I earn yield on generated DAI?
A: Absolutely. You can deposit DAI into the Dai Savings Rate (DSR) or lend it on protocols like Aave or Compound to earn passive income.
Q: Does borrowing DAI affect my credit score?
A: No. MakerDAO is non-custodial and permissionless—no identity verification or credit checks required.
Final Thoughts: Why Borrow With MakerDAO?
MakerDAO remains a cornerstone of DeFi due to its robust security model, transparent governance, and widespread adoption. With over $5B+ in total value locked (TVL), it continues to lead despite rising competition from platforms like Synthetix and Liquity.
By leveraging tools like Oasis.app, users gain financial flexibility—accessing cash flow without triggering taxable events from asset sales.
Whether you're hedging, investing, or exploring yield opportunities, borrowing DAI through MakerDAO offers a decentralized alternative to traditional lending.
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