What is Dai?

In short, Dai is a decentralized stablecoin created by MakerDAO (MKR). One Dai equals one US dollar (1:1 ratio) and will always remain so until the token is taken out of the circulation.

Dai maintains stable value without centralized trust in a clever and interesting way. It shifts following market changes and thus keeps a steady price against other cryptocurrencies. The process is facilitated by the Maker platform along with the MKR token, CDP smart contracts, and several other stabilization mechanisms. There is no need for a centralized authority that oversees fiat-collateralized stablecoins like Tether (USDT), nor any traditional bank backs it. The project lives entirely on the Ethereum blockchain and its smart contracts, and that makes Dai a truly trustless and decentralized stablecoin which cannot be shut down nor censored.

In summary, the project brings the following benefits:

• One Dai will always be worth $1.

• No government or other centralized authority can shut it down.

• No individual can control it.

• Like other cryptocurrencies, it can be exchanged directly bypassing all middlemen.

• It can be traded freely as any other ERC-20 token.

• It brings trustless stability to the volatile crypto ecosystem.

• Anyone from any place in the globe can receive and send it just by having an Ethereum wallet.

What Is A Stablecoin?

Stablecoin is a cryptocurrency whose value is pegged to less volatile assets like fiat currencies, collaterals, other cryptocurrencies, a basket of goods in a consumer price index, precious metals or oil. Some stablecoin projects even attempt to fix a steady value using algorithms. The general idea of a stablecoin is to produce a crypto asset whose value isn’t prone to extreme volatility.

The most popular stablecoins include Tether (USDT), TrueUSD (TUSD), Dai (DAI), Paxos Standard Token (PAX), USD Coin (USDC), Gemini Dollar (GUSD), and others.

Stablecoins play a vital role in the cryptocurrency ecosystem. With them, anyone can:

• Have a stable store of value during volatile market periods.

• Use a stable cryptocurrency for fast and immutable global remittances and payments.

• Send uncensorable transactions to anyone with a wallet and the internet connection.

• Send large amounts of money with lesser fees.