What is Dai? Learn what Dai is in one minute

Dai, a decentralized stablecoin pegged to the US dollar, aims to provide a stable and reliable way to store and transfer value on the Ethereum blockchain.

Oct 06, 2024 at 12:30 am

1. What is Dai?

Dai is a decentralized stablecoin pegged to the US dollar, meaning that its value is intended to remain stable at $1. It was created by MakerDAO, a decentralized autonomous organization (DAO) based on the Ethereum blockchain.

2. How does Dai work?

Dai is backed by collateral, which is locked in a smart contract on the Ethereum blockchain. When you create Dai, you have to deposit collateral worth more than the amount of Dai you want to borrow. For example, to borrow 100 Dai, you would need to deposit at least 150 ETH.

3. Stability mechanism

The stability of Dai is maintained by a system of incentives and penalties. If the price of Dai falls below $1, incentivizes users to buy and burn Dai. If the price of Dai rises above $1, it encourages users to sell their Dai for a profit.

4. Uses of Dai

Dai can be used for various purposes, such as:

As a medium of exchange: Dai can be used to send and receive payments without the volatility of other cryptocurrencies.
As a store of value: Dai can be used as a stable way to store value over time due to its peg to the US dollar.
As collateral: Dai can be used as collateral for other decentralized financial applications, such as loans and insurance.

5. Conclusion

Dai is a fully decentralized stablecoin that offers a stable and reliable way to store and transfer value on the Ethereum blockchain. Its unique design and stability mechanism have made it a popular choice for users worldwide.

Disclaimer:info@kdj.com

The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research！

If you believe that the content used on this website infringes your copyright, please contact us immediately (info@kdj.com) and we will delete it promptly.

Fear & Greed Index

Trade Now

Biggest Gainers

RAIN

$0.007852

113.00%

Trade Now
PIPPIN

$0.06097

51.96%

Trade Now
PARTI

$0.1396

42.04%

Trade Now
WAVES

$0.9141

41.69%

Trade Now
ARC

$0.04302

35.73%

Trade Now
HONEY

$0.01029

21.80%

Trade Now

Latest Crypto News

Work Dogs Unleashes TGE Launch, Sets Sights on Mid-2026 Listing & Ambitious $25 Token Target
2026-01-31 15:50:02
WD Coin's TGE Launch Ignites Excitement: A Billion Tokens Set to Hit the Market
2026-01-31 16:10:02
Royal Mint Launches Interactive £5 Coin for a Thrilling Code-Breaker Challenge
2026-01-31 16:10:02
Crypto, AI, and Gains: Navigating the Next Wave of Digital Assets
2026-01-31 15:50:02
Coin Nerds Forges Trust in the Digital Asset Trading Platform Landscape Amidst Evolving Market
2026-01-31 16:05:01
Blockchains, Crypto Tokens, Launching: Enterprise Solutions & Real Utility Steal the Spotlight
2026-01-31 12:30:02

Related knowledge

What is a stablecoin like USDT or USDC?

Oct 13,2025 at 03:54am

Understanding Stablecoins in the Cryptocurrency EcosystemStablecoins such as USDT and USDC serve as digital assets designed to maintain a consistent v...

What is the difference between decentralized stablecoins and centralized stablecoins? Pros and cons comparison

Jun 15,2025 at 09:42am

What Are Stablecoins and Why Do They Matter?Stablecoins are a category of cryptocurrencies designed to maintain a stable value, usually pegged to an e...

What is the role of stablecoins in DeFi? Advantages and limitations analysis

Jun 14,2025 at 06:28am

Understanding Stablecoins in the DeFi EcosystemStablecoins play a pivotal role in the decentralized finance (DeFi) landscape by providing a bridge bet...

How do algorithmic stablecoins work? Potential risks and market impact

Jun 12,2025 at 02:07pm

Understanding Algorithmic StablecoinsAlgorithmic stablecoins are a type of cryptocurrency designed to maintain a stable value relative to a specific a...

How do stablecoins anchor legal currencies? Technical and economic model analysis

Jun 16,2025 at 08:43am

Understanding the Concept of StablecoinsStablecoins are a category of cryptocurrencies designed to maintain a stable value relative to a specific asse...

How do stablecoins maintain price stability? Principles and risk analysis

Jun 11,2025 at 12:01am

Understanding the Mechanisms Behind Stablecoin StabilityStablecoins are a category of cryptocurrencies designed to minimize price volatility, often pe...