What is DAI?
DAI is a stablecoin that operates on the Ethereum blockchain with its value pegged to the US Dollar. DAI cryptocurrency manages to maintain its worth without a centralized trust, which sets it apart from its centralized and regulated competitors – like Tether (USDT) or Paxos (PAX). DAI’s decentralized nature and lack of regulating authority mean that no government can influence it or shut it down.
DAI coin was created by Maker – an autonomous organization whose another project, Maker coin (MKR), is also an ERC-20 decentralized asset.
DAI price stability is maintained through a lending system on the Ethereum (ETH) network. To create DAI coin, users deposit their ETH into a Collateralized Debt Position – a personal smart vault that stores Ethereum. With the deposited ETH stored in the vault as collateral, a comparable amount of DAI is sent to the Ethereum holder.
- Being a stablecoin, DAI supports its value during volatile market shifts;
- DAI is a decentralized token that cannot be limited by regulatory agencies, which makes it an appealing option for users looking to distance their assets from third-party supervision;
- The DAI lending process offers certain monetary perks for its participants;
- Like all other ERC-20 tokens, DAI coin can be easily stored on any Ethereum wallet.
- Does not have nearly as many trading pairs as its competitors;
- The coin is dependent on Ethereum, which is a rather volatile asset;
- Some experts warn against calling DAI a stablecoin, implying that its stability is an aspiration, butnot a reality.
How does DAI coin remain stable?
DAI cryptocurrency is backed with ETH that is locked in publicly viewable contracts. What’s more, the amount of ETH locked in these contracts always exceeds the value of all DAI in circulation. With all contracts openly stored on the blockchain, any user can perform a real-time audit if necessary.
Maker gives DAI its stablecoin properties by implementing a series of balancing mechanisms that kick in if DAI’s value strays too far from the dollar. When the price of a single DAI coin falls below $1, the system encourages users to increase its price. If one DAI is worth over $1, the same incentives encourage the price to decrease. In both cases, money can be made as a result of the price swings.
The further DAI deviates from its $1 equivalent, the better financial incentives there are in forcing it back to its original price.
How to buy DAI?
As of April 2020, DAI can be traded via the following exchanges:
You can also get DAI on the SwapSpace cryptocurrency exchange aggregator, which is a quick and easy way to obtain the required amount of DAI.
How to exchange DAI on SwapSpace?
- On SwapSpace homepage, select DAI in “You send” section and the cryptocurrency you would like to receive in “You get” section. Enter the amount of DAI crypto you want to exchange.
- Choose the instant exchange service that suits you most.
- Specify the recipient address and check if all the data is correct.
- Send your DAI coins to the address you will see on the screen.
- Wait until the exchange is complete.
How to store DAI
DAI is an ERC-20 coin that can be kept in any ERC-20-compliant wallet. Here are the best DAI wallets: MyEtherWallet, Atomic Wallet, Exodus, Jaxx, and MetaMask. More information about each option is in this article.
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