Cryptocurrencies with a stable or fixed price are no longer a novelty: they are called stablecoins within the community. One of the most durable and popular stablecoins is Tether, which we have seen in detail. Also, almost everyone has heard about USDC, PAX, Gemini Dollar, and Facebook’s high-profile Libra project. Against their background, the DAI project stands out, which has a lot of features. What is DAI?
DAI is an ERC20 token on the Ethereum blockchain, whose stable price is tied to the dollar price. This is also the key to the MakerDAO cryptocurrency lending system, which we have already tried to make money on. When someone takes credit for MakerDAO, new DAI tokens are created. It is in this coin that loans and payments are made.
After creating new DAI, they function according to the simple principle of stablecoin based on Ethereum. They can be used to pay for things and can be easily transferred between Ethereum wallets.
Read on the topic: Loans on blockchain: how does Maker work and why do WE need Dai stablecoin?
How did the DAI token appear?
DAI is a MakerDAO product that was founded by rune Christensen. Now he also holds the position of General Director.
Technically, the current version of DAI is an improved version of the stablecoin called Multi-collateral DAI. Multi-collateral means that different types of crypto assets can be used to create DAI tokens. The old version of DAI is now called SAI and is known as DAI with a single asset for collateral. It is clear that only ETH can be used for these purposes. Well, the first crypto asset in the updated DAI system with support for several types of assets — in addition to ETH — is the Basic Attention Token (BAT).
It is useful to read: how to earn cryptocurrency using CDP. Instructions on fingers and profit calculation.
What is special about the DAI project?
The DAI rate is controlled through a system of smart contracts that are automatically self-executed. If the DAI price retreats too far from the dollar price, Maker tokens can be created or burned to stabilize the DAI price. MakerDAO algorithms automatically manage the DAI price, so there is no need for trust between contract parties to maintain currency stability.
If the system works as intended and one DAI is equal to one dollar, then MKR holders will benefit because the total MKR offer will decrease. And when an asset becomes rarer, its price increases accordingly.
As of today, DAI has been able to maintain a stable price for two years.
Since DAI is just an Ethereum-based token, anyone can use DAI and create applications for IT without additional permissions. As a token on the ERC20 model, DAI functions as a “building block” that can be included in any decentralized application that requires a stablecoin or an internal payment system. Developers can also use DAI in various smart contracts and modify the token for different purposes.
For example, xDAI allows you to use DAI on an ultra-fast and inexpensive sidechain, that is, an additional chain. This makes transfers and payments easier and more efficient. Chai and rDAI take a regular Dai token and place it in a pool that allows them to receive dividends. The user can use these dividends at their own discretion-re-invest or fix profits and withdraw money.
What can I use DAI tokens for?
DAI are created whenever someone takes a loan on the MakerDAO platform. And are destroyed when the loans are extinguished. The most direct way to get a DAI is to take out a loan on MakerDAO Oasis. You can also trade DAI on the same platform or use a centralized crypto exchange.
One of the main directions of using DAI is stable hedging — that is, insurance of risks from jumps in the rate of more popular crypto assets such as Ethereum or Bitcoin. A stable DAI price means that the token is suitable for investors or traders who believe that the market will soon fall. Since DAI is stable, it is also one of the most ideal crypto assets for payments.
Prospects for the DAI project
MakerDAO is working hard on the DAI brand as “the world’s first impartial currency”. And it all starts with a symbol that can become as recognizable as the dollar ($), Euro ( € ), and pound (£) symbols. In an effort to become the first non-trusting currency, DAI needs to be recognized by millions of people.
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MakerDAO is a place in Santa Cruz where you can spend ethereum and pay using another cryptocurrency. Evaluate all the advantages of crypto payments with MakerDAO, take an active part in the mass adoption of cryptocurrencies and the approach of the crypto revolution!
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