DAI coin is a stablecoin created by MakerDAO on the Ethereum blockchain. It aims to always be equal in value to the US dollar. DAI is commonly used for lending and borrowing cryptocurrencies without relying on a middleman, offering a transparent and open system with few limitations.
This article will provide you with an overview about DAI coin. Stay tuned with AZCoin to learn more.
What is Dai (DAI)?
DAI is a decentralized, collateral-backed stablecoin that aims to maintain a stable value of one US dollar. It is the first and most widely used decentralized stablecoin, and it is currently the 18th largest cryptocurrency by market capitalization.
How does Dai work?
Dai is generated by users depositing collateral into a smart contract. The collateral can be a variety of cryptocurrencies, including Ethereum(ETH), Basic Attention Token (BAT), USD Coin(USDC), and Compound (COMP). The amount of Dai that is created is equal to the value of the collateral that is deposited.
For example, if a user deposits 100 ETH into a smart contract, they will receive 100 Dai. The value of 100 ETH is approximately equal to $100, so the value of the 100 Dai is also approximately equal to $100.
If the value of the collateral falls below a certain level, the Dai holder is required to deposit additional collateral or repay some of their Dai. This helps to ensure that the value of Dai remains pegged to the US dollar.
Who Are The Founders of Dai?
The Maker Foundation, established in 2014 by developer Rune Christensen, created DAI.
The Maker Protocol was developed as a decentralized alternative to centralized stablecoin protocols at that time.
DAI was officially introduced on the Maker Protocol in 2017. It was designed to offer a stable and secure lending asset without compromising decentralization for businesses and individuals.
After setting up the Maker Protocol, the Maker Foundation handed over control to MakerDAO, a decentralized autonomous organization that now governs the entire protocol.
What Makes Dai Unique?
DAI belongs to a new type of digital currency known as stablecoins. These stable coins are valued for their ability to provide a steady and reliable store of value in a market that is typically unpredictable.
Typically, maintaining price stability involves relying on large, centralized organizations. However, the Maker Protocol takes a different approach by operating DAI in a fully decentralized manner. The governance of the protocol is entrusted to a network of users within MakerDAO.
For the Maker Protocol to function autonomously, it requires real-time data to be consistently inputted into the system. This ensures that the automated Collateralized Debt Positions (CDPs) are properly collateralized at all times.
What Gives Dai Value?
DAI’s supply depends on demand. When a user deposits ETH or other supported ERC20 tokens as collateral on the Market platform, DAI is generated and lent to the user at a collateral-to-loan ratio of 66%. This process increases the total supply of DAI and is the main factor determining DAI’s value.
Current amount of DAI (DAI) in circulation
The current amount of DAI in circulation is 5,292,881,825.
In contrast to centralized stablecoins that are created by a private entity based on their own rules, new DAI tokens can be generated by any user through the CDP feature of the Maker Protocol.
Operating on the Ethereum blockchain, Maker is the platform that manages the supply of DAI. To uphold its stable value linked to the US dollar, the Maker Protocol is programmed to guarantee that each DAI token is backed by the correct quantity of other digital assets.
Dai Network: How Safe Is It?
DAI is an ERC20 token based on Ethereum, meaning it is secured by the Ethereum Ethash Algorithm.
MakerDAO is a decentralized autonomous organization made up of participants from around the world who govern the Maker Protocol and DAI. They are fully responsible for its governance.
How To Use Dai?
Besides being a safe and reliable payment method, DAI provides crypto traders with a valuable tool to reduce their risk. In times of high volatility in the cryptocurrency market, users can protect their funds by converting them into DAI.
Moreover, DAI allows users to obtain collateralized loans with several benefits compared to traditional options. Users can secure a loan by locking their digital assets as collateral without requiring approval from lenders. They can then use the borrowed DAI to buy various assets, including more cryptocurrencies.
How To Choose a Dai Wallet
Choose a Dai DAI wallet based on your needs and the amount you want to store.
- Hardware wallets offer high security but can be more complex and expensive, suitable for storing larger amounts.
- Software wallets are free and easy to use, better for smaller amounts or beginners.
- Online wallets are convenient but less secure, best for small amounts or experienced users.
Kriptomat provides a secure storage and trading solution for Dai DAI tokens with enterprise-grade security and user-friendly features.
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Dai (DAI) Governance
Dai, the native stablecoin of the Maker Protocol, is controlled by holders of Maker MKR tokens. Governance in MakerDAO occurs through onchain and offchain mechanisms where MKR token holders vote on proposals using the Maker Protocol’s onchain governance system.
There are two types of voting within this system: Governance Polls and Executive Votes. Any MKR token holder can take part in these votes to influence the direction of the protocol.
In addition to onchain voting, MKR stakeholders can also participate in offchain voting by interacting with the community in forums and public governance webcalls.
Dai Token FAQ
Is 1 DAI always equal to 1 USD?
DAI is not always a hard-pegged stablecoin, so its value can fluctuate slightly. In reality, DAI has a flexible peg that can adjust smoothly to match the low volatility of the USD.
What will MakerDAO do after the emergency shutdown?
After an Emergency Shutdown, users can exchange DAI for collateralized assets at a 1 USD rate. The Maker Protocol is decentralized and open-source, allowing anyone to redeploy the system after the winddown process.
Where to buy DAI?
Since January 2019, DAI can be traded on the following exchanges:
- HitBTC pairs with BTC, ETH, USDT, TUSD, XRP, EURS, LTC, XMR, NEO, POA, EOS, BCH
- Bitfinex, Ethfinex pairs with USD, BTC, ETH
- Coinhub pairs with BTC, ETH, LTC
- Coinsuper, Kyber Network pairs with ETH
- Exmo pairs with USD, RUB, BTC, ETH, MKR
- Bancor pairs with BNT
- Radar Relay pairs with WETH, MKR, ZRX, OMG, REP
- Gateio pairs with USDT.
You can consider choosing a reputable trading platform by checking out the best crypto exchanges 2024 on AZCoin.
Where to store DAI
Both DAI and Makercoin are Ethereum ERC-20 tokens and can be stored in ERC-20 compliant wallets such as MyEtherWallet, Atomic, Exodus, Jaxx, Mist, Metamask, and others. For an extra layer of security, you can also use hardware wallets like Ledger or Trezor.
Conclusion
Here is some basic information about DAI coin. If you are truly interested and wish to trade this type of currency, please consider and check out the evaluation process at AZCoin. Wish you good luck on your cryptocurrency trading journey.
I am Tony Vu, living in California, USA. I am currently the co-founder of AZCoin company, with many years of experience in the cryptocurrency market, I hope to bring you useful information and knowledge about virtual currency investment.
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