Learn About Dai
Dai is the first decentralized, collateral-backed stable cryptocurrency. As an ERC-20 token, DAI maintains a 1:1 peg with the U.S. dollar by locking crypto assets in smart contracts. Unlike centralized stablecoins, DAI is native to the Maker Protocol—a decentralized ecosystem on Ethereum.
Key Features:
- Decentralized stablecoin
- Collateralized by crypto assets (ETH, BAT, etc.)
- Governed by MakerDAO
How Does Dai Work?
DAI operates through Collateralized Debt Positions (CDPs), smart contracts where users lock assets (e.g., ETH) to generate DAI.
Collateralization Mechanism
- Over-collateralization: Users deposit $200 in ETH to borrow $100 DAI, buffering against volatility.
- Liquidation: If collateral value drops, assets are sold to cover the loan.
- Redemption: Return borrowed DAI + fees to reclaim collateral.
Who Created Dai?
Founded in 2014 by Rune Christensen, Dai launched in 2017 under the Maker Protocol. Governance was later transferred to MakerDAO, a decentralized organization.
MakerDAO’s Role
- Adjusts fees (stability fees) to maintain DAI’s peg.
- Votes on protocol upgrades via MKR tokens.
Why Is Dai Unique?
- Decentralized Stability: No central authority controls DAI.
- Transparent Governance: MakerDAO stakeholders vote on changes.
- Flexible Supply: DAI minted/burned based on demand.
What Gives Dai Value?
DAI derives value from:
- Collateralized assets backing each token.
- Market demand for decentralized stablecoins.
DAI Supply & Circulation
- No fixed supply: Circulating DAI fluctuates with CDP activity.
- Minting: Users generate DAI by depositing collateral.
| Metric | Detail |
|-----------------|---------------------------------|
| Peg | ~1 USD (free-floating) |
| Governance | MakerDAO (MKR holders) |
Security & Emergency Measures
- Ethereum Security: DAI relies on Ethereum’s Ethash algorithm.
- Emergency Shutdown: A fail-safe to redeem collateral if systemic risks arise.
How to Use Dai
- Payments: Stable medium for transactions.
- Trading Hedge: Park funds in DAI during volatility.
- Loans: Borrow against crypto without credit checks.
Choosing a DAI Wallet
| Type | Pros | Cons |
|--------------|------------------------------|------------------------------|
| Hardware | Secure offline storage | Expensive, complex |
| Software | Free, user-friendly | Less secure than hardware |
| Web | Accessible | Riskier (trust required) |
DAI Governance
- MKR Holders: Vote on fees, collateral types, and protocol upgrades.
- Voting Types: Governance Polls (off-chain) and Executive Votes (on-chain).
Frequently Asked Questions
Is DAI Always $1 USD?
No. DAI’s peg is free-floating but typically hovers near $1 due to algorithmic adjustments.
How to Buy DAI?
Purchase DAI on exchanges like Kriptomat using USD, EUR, or crypto.
What’s DAI’s Price Today?
DAI aims for ~$1 USD. Check real-time prices here.
Can DAI Fail?
An Emergency Shutdown would freeze the protocol but allows collateral redemption.
Final Notes: Dai combines stability with decentralization, offering a trustless alternative to traditional stablecoins. For deeper insights, visit MakerDAO’s resources or try minting DAI via CDPs!
### SEO Keywords:
- Decentralized stablecoin
- Collateralized Debt Position (CDP)
- MakerDAO governance
- DAI price stability
- Ethereum ERC-20 token
- Crypto-backed loans
- Over-collateralization