What is Dai (DAI) – All about Dai Explained

Promoting crypto funding is the main goal of the Maker protocol, for which Dai was created. But being an ERC20 token, Dai Crypto enables a wide range of potential Ethereum use cases, including the creation of smart contracts. The open-source software programme known as the Maker Protocol is maintained by the Maker distributed autonomous organisation. It features two native cryptocurrencies, one of which is known as Dai (DAI) (MakerDAO).

Since DAI is a decentralised stablecoin, smart contracts, as opposed to a centralised authority or organisation, are employed to sustain it. It is also soft-pegged to the U.S. dollar, meaning that it is tied to USD but not backed by actual dollars, in an effort to keep its value comparatively constant versus other cryptocurrencies. The price of the Dai cryptocurrency is managed by MKR, the utility and governance token of MakerDAO.

The collateral-backed cryptocurrency Dai (DAI) intends to maintain a value that is virtually comparable to that of the US dollar with the aid of smart contracts. In other words, Dai coin is a stablecoin. However, unlike other stablecoins that are controlled by centralised organisations with the intention of maintaining their prices stable, DAI crypto is based on smart contracts and is backed by other forms of cryptocurrency by using collateralized debt.

Frequently Asked Questions

Dai (or DAI, formerly Sai or SAI) is a stablecoin on the Ethereum blockchain, whose value is maintained as closely as possible to one US dollar (USD) by a system of smart contracts and the decentralised participants those contracts reward to carry out maintenance and governance tasks. Dai is maintained and governed by MakerDAO, a decentralised autonomous organisation (DAO) made up of the holders of its governance token, MKR. In order to guarantee the stability of Dai, these owners may propose and vote on modifications to specific parameters in its smart contracts.

DAI is an algorithmic stablecoin similarly to UST based on Ethereum Blockchain. Compared to UST, it is excessively collateralized. Therefore, when users lock up their cryptocurrency and borrow money, they are allowed to borrow DAI worth 55% to 75% of their collateral. This model is reportedly far safer, according to experts.

DAI is the decentralized stablecoin developed by Maker. After it’s launch, it has been a top choice among crypto users. Maker users can lock supported collateral, including ETH, WBTC, USDC, and BAT to create new DAI. When the loan is repaid the collateral is unlocked and the DAI created gets destroyed automatically. One of the incentives is that anyone can mint new DAI. The flexibility to create DAI with certain assets is increasing day by day. By lending your crypto you can Make money through DAI.

To purchase DAI Coin, You have to create an account with any exchange that accepts the stablecoin. Coinbase is the most well-liked choice because it makes it simple to convert other cryptocurrencies to DAI. You can go ahead and purchase any quantity of DAI Coin you desire once your account has been created. You won’t be getting more than what you paid into the DAI Coin because it is pegged at a 1:1 ratio to the US dollar. After confirming your purchase, you have the option of leaving it on the platform or sending it to a personal wallet. To keep your DAI Coin secure, you might also think about using hardware wallets like the Trezor or Ledger Nano series.

Like all other forms of crypto lending, DAI lending operates in a similar manner. As a DAI owner, you can sell your tokens to other cryptocurrency users on an exchange and eventually get paid interest and your tokens back.

CeFi lending and DeFi lending are two methods you can lend out your DAI. You are essentially selling your DAI tokens through a centralised exchange when you lend through CeFi. Your tokens will be made available to borrowers through decentralised lending on an exchange. Despite the similarities between the two solutions, there are a few distinctions that are significant.

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