[Jd]

There were a few products prior to MakerDAO that failed when their collateralized peg collapsed, most notably BitUSD and NuShares.

MakerDAO is somewhat more sophisticated and holds way more capital but the fundamental problem is that you can't exclusively collateralize a dollar peg from a highly volatile unit of account with elastic demand or black swan events can wipe it out.

[chrisco255]

Why not? DAI survived the bear market of 2018 and 2019 that saw ETH plunge from $1400 to $85. And it held with no more than 5% variance from $1 USD.

[daics]

BitUSD had a different mechanism as it only allowed its own token as collateral.

The Maker protocol doesn't use MKR as collateral, instead it serves as an efficient debt engine for other liquid assets and its holders collects fees on these debt positions almost like a bank. The interest fees collected stream in real-time from those who take debt(yes, this is possible on a blockchain) and a large portion is sent to depositors who hold on to the dollar stablecoin a savings rate in real time too.

Ether is just the first asset being used to perfect the mechanisms needed for fully autonomous banking. Any real world asset can be tokenized to take advantage of this efficient lending protocol right now.