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DAI Dai Crypto is generally used as a hedge against market volatility. In addition to maintaining its price consistent, Dai is a wonderful pick if you’re looking to find a stable currency
What Is DAI Dai Crypto?You have not selected any currency to display
Dai Crypto is a stablecoin that is firmly tied to the US dollar using automated smart contracts on the Ethereum network. Dai is not like the more established stablecoins such as Tether (USDT) and USDC. Dai is decentralized and trustless, which means that holders do not have to rely on a single governing party to maintain the coin stable.
To preserve its price stability, DAI’s value is managed by MakerDAO, its decentralized governance community. While genuine DAI stablecoins are generated via its Maker Protocol platform that takes other cryptocurrencies as collateral, DAI can also be acquired directly using fiat money (such as the U.S. dollar) on most regulated crypto exchanges
What’s a stablecoin?
A stablecoin is a sort of cryptocurrency or digital money, that tries to maintain a stable value. Therefore, avoiding the danger of their value shifting substantially owing to turbulent crypto markets. As such, stablecoins might make for a safer investment alternative. Stablecoins are aimed at establishing a secure and stable environment for expanding the adoption of digital currencies and counteracting the speculative nature of digital assets. Cryptocurrencies provide dual benefits, i.e., the safety and decentralized character of virtual currencies, coupled with the stability element of fiat currencies.
The stablecoins with the biggest market cap have a value of precisely 1 USD every time
How Does DAI Dai Crypto Work?
One of the primary advantages of DAI is that it offers the transactional benefits of a cryptocurrency with little volatility owing to being pegged to the US dollar. DAI is an Ethereum-compatible ERC-20 token designed exclusively for use on the Ethereum network. ERC is an acronym for “Ethereum Request for Comment,” a 2015 standard for creating and enabling smart contracts on the Ethereum network.
DAI may be acquired directly on centralized cryptocurrency exchanges or decentralized exchanges (DEXs).
Additionally, you may borrow DAI via the Maker Protocol by depositing Ethereum-based assets as collateral to guarantee the amount of DAI borrowed. To maintain network liquidity, DAI needs a bigger collateral deposit than the amount of DAI borrowed. If the value of your crypto-collateral falls below the value of the issued DAI tokens, you may forfeit the collateral.
If, on the other hand, the value of your collateral grows, your DAI borrowing limit increases accordingly. The Maker Protocol functions similarly to an escrow account, where the collateral is held until the borrowed DAI and processing costs are repaid.
According to Dai’s proponents, its decentralized structure gives a more robust measure of stability and trust than other stablecoins.
Tether, for example, came under fire for its inability to demonstrate that each USDT was backed by a dollar. This concern was confirmed in April 2019, when Tether Limited’s attorneys confessed that each USDT was backed by just $0.74 in cash and financial equivalents.
By contrast, all Dai issuance and burning are transparent on the Ethereum blockchain. And, rather than being administered by a single authority, Dai is maintained by MakerDAO, a decentralized autonomous organization (DAO) comprised of MKR token holders.
While anybody may make a proposal to MakerDAO, only MKR holders have the ability to vote on critical Dai and Maker Protocol administration and development decisions. Votes are distributed proportionally, which means that each MKR has one more vote.
Dai was put to the ultimate test during the March 2020 liquidity crisis. When the market collapsed, soaring gasoline prices rendered many DeFi goods almost worthless. As the price of ETH fell, Dai went in the other way, peaking at about $1.10.
This was partly because when ETH dropped roughly 30% of its value in less than 24 hours, many CDPs lacked sufficient collateral to repay the loan. Automated processes liquidated over $4.5 million USD in loans to save the Dai ecosystem.
MakerDao intends to broaden Dai’s use to fields such as NFTs, where it has been incorporated into a number of art platforms, including the Museum of Contemporary Digital Art (MoCDA). Dai has also seen some limited success in e-commerce and payment systems via Coinbase Commerce and Dai-powered debit cards.
MakerDAO, created in 2015 by Rune Christensen, a Danish entrepreneur with a background in biology and international business, developed Dai. MakerDAO founded the Maker Foundation in 2018 to assist build and maintaining the Dai ecosystem. Christensen was named CEO.
On September 24, 2018, Andreessen Horowitz invested $15 million USD in MakerDAO by purchasing MKR tokens, representing around 6% of the total supply at the time. In November of the same year, Dai upgraded its single-collateral system (now SAI) to a multi-collateral system (DAI).
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