Launched by MakerDAO in November 2019, Dai (DAI) is a crypto-collateralized stablecoin soft-pegged to the US Dollar (1:1). Issued via the Maker Protocol—an Ethereum-based decentralized application (DApp)—DAI leverages the ERC-20 standard for seamless interoperability within the Ethereum ecosystem.
Unlike centralized competitors like USDT and USDC, DAI prides itself on full decentralization, backed solely by crypto assets. Its governance is democratically managed by MKR token holders, ensuring transparency and resilience against market volatility.
How DAI Works
Collateralization & Minting:
- Users deposit Ethereum-based assets (e.g., ETH, BTC, LINK) into Maker Vaults as collateral.
- DAI is minted against this collateral, with minimum collateralization ratios varying by asset (e.g., 165% for LINK, 101% for GUSD).
Liquidations:
- If collateral value drops below the threshold, vaults are automatically liquidated via auctions to protect the protocol.
- Example: A 150% ETH-collateralized vault liquidates if ETH’s value dips below this ratio.
Debt Auctions:
- If auctions fail to cover debts, MKR tokens are minted and sold to recapitalize the system.
Key Use Cases
🔹 Store of Value: Hedges against crypto volatility.
🔹 Medium of Exchange: Accepted by 400+ DApps, including DeFi platforms and games.
🔹 Yield Generation: Earn via Dai Savings Rate (DSR) or third-party DeFi apps.
🔹 Unit of Account: Prices services in DAI within Ethereum’s ecosystem.
DAI vs. Competitors
| Feature | DAI | USDT | USDC |
|--------------|---------------|---------------|---------------|
| Backing | Crypto | Mixed Reserves| Fiat |
| Governance| Decentralized | Centralized | Centralized |
| Market Cap (2023) | $5.3B | $89B | $24.4B |
👉 Compare DAI’s real-time price
FAQ
How is DAI secured?
DAI inherits Ethereum’s blockchain security and is audited by MakerDAO’s decentralized governance.
Can I mine DAI?
No. DAI is minted only through collateralized vaults.
What’s the Dai Savings Rate?
A feature letting users earn yield by locking DAI in DSR contracts.
Next Steps
- Trade DAI: Available on OKX.
- Store Safely: Use MetaMask, Ledger, or other ERC-20 wallets.
- Earn Yield: Explore DeFi platforms like Compound or Aave.
DAI merges stability with decentralization, making it a cornerstone of Ethereum’s DeFi landscape. 🚀
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