What is Dai
Dai (DAI) is a decentralised, collateral-backed stablecoin that is soft-pegged to the US dollar and is based on the Ethereum blockchain. Dai is backed by collateralised assets, which is composed of other cryptocurrencies held within smart contracts every time new DAi is minted.
A brief history of Dai
Created in December 2017 by decentralised autonomous organisation MakerDAO and crypto lending platform Maker Protocol. The current iteration of DAI was created in December 2019, replacing its previous stablecoin iteration known as the Single Collateral Dai (SAI).
How Dai works
When the current iteration of DAI was released in 2019, it was generated through the Maker Protocol, a smart contract lending platform that offers loans to users who lock in their collateral in the form of cryptocurrencies. This collateral is then exchanged for DAI, which is a multi-collateral asset provided by Maker, which soft-pegs DAI to the US dollar to help mitigate price volatility.
What is Dai used for?
Dai services crypto traders and investors in need of safe-haven assets to their portfolios. Dai’s relatively stable price helps offset significant market fluctuations, making it a blockchain-native solution for crypto users.