What is DAI (DAI)?

What is DAI (DAI)?

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DAI is an Ethereum-based stablecoin and the first decentralized, collateral-backed cryptocurrency that forms part of the top 100 cryptocurrencies in the market. Maker Protocol and the MakerDAO decentralized autonomous organization are responsible for managing the issuance of DAI.

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The Ethereum network uses the ERC20 standard, and the DAI token has a fixed value of one US dollar. As a result, it serves as the foundation of the MakerDAO loan platform. 

On MakerDAO, the DAI tokens are produced when loans are taken out. In short, it is a form of borrowing and repaying the money. DAI is a stable Ethereum token once it is generated, and using it to buy goods and services can be done quickly and easily.

 

Component DAI (DAI)
Technologies Maker Protocol, Ethash
Market Capitalization $9.2 Billion+
Open-Source Yes
Consensus Mechanism None
Smart Contracts Yes
Founders/Authors MakerDAO and Maker Protocol
Launch Date 2017
Circulating Supply of Coins 9,303,319,502 DAI
Maximum Coin Supply None
Mining-based Coin? No
Is DAI a Stablecoin? Yes
Does DAI have a burn rate? Yes
Does DAI have a Whitepaper? Yes, the whitepaper can be viewed here

 

Evolution and Development of DAI

The evolution and development of DAI are as follows:

  • MakerDAO was founded in 2014 by Rune Christensen, a Danish entrepreneur.
  • DAI and its proprietary smart contracts were formally published on the network of Ethereum in December 2017.
  • MakerDAO established the Maker Foundation in 2018, based in Copenhagen, to assist in bootstrapping the ecosystem by, for example, building programming required for the platform to function and evolve.
  • MakerDAO faced internal conflict in 2019 on whether it should further its integration with the existing banking system. Christensen desired more regulatory compliance, allowing enabling the use of assets other than bitcoin as security for DAI. 
  • In March 2020, because of the unprecedented market instability that accompanied the commencement of the COVID-19 pandemic, DAI entered a deflationary deleveraging spiral, reaching a peak of $1.11 before reverting to its planned $1.00 valuation.

 

What makes DAI unique?

DAI's primary advantage stems from its modest peg to the US dollar's exchange rate.

The cryptocurrency market is infamous for its volatility, with even the strongest, most liquid currencies such as Bitcoin occasionally suffering price fluctuations of 10% or more in a single day (both up and down).

Under these conditions, market participants are naturally inclined to diversify their portfolios with safe-haven assets, whose constant price may help counter substantial market changes.

Stablecoins form part of this type of financial assets, and these are cryptocurrencies whose prices are linked to stable assets – most frequently, traditional fiat currencies such as the US dollar or euro.

Another significant benefit of DAI is that it is governed by a decentralized autonomous organization through a software protocol rather than a corporate firm.

Subsequently, all instances of token issuance and burning are handled and publicly documented by Ethereum-powered self-enforcing smart contracts, increasing the system's transparency and reducing its susceptibility to manipulation.

Additionally, the process of building DAI software is more democratically managed — through a direct vote by the token's ecosystem's frequent users.

 

What are the main uses for DAI?

Blockchain token DAI has a constant value of one US dollar on the Ethereum network. Therefore, it serves as an integral component of the MakerDAO loan platform. DAI is minted and burnt according to its demand on the MakerDAO platform.

Once DAI has been produced, it can be used as a standard Ethereum token in any way that the user sees fit. DAI can be used to transfer value between wallets and to make payments.

In addition, DAI holders can use the crypto token as a building block that can be added to any Decentralized Application (DApp), especially those that need a stable asset or a payment system.

DAI may also be used in a variety of ways by developers when they wrap it in multiple smart contracts. DAI can be put on a low-cost sidechain to speed up and simplify transfers and payments, such as xDAI.

Users can manage the interest that is generated by Chai and rDAI, which takes standard DAI and places it in an interest-producing pool.

 

What is the future potential for DAI?

DAI has a lot of uses that could ensure a bright future for this crypto coin. In addition to its wide range of uses, DAI is also widely integrated within the Ethereum blockchain, where it can be used in hundreds of DApps, including gaming, DeFi, NFTs, and several others.

DAI offers a massive amount of flexibility as well as a utility while it simultaneously features the price stability of the US dollar. While the value of DAI will never truly increase past that of the US dollar, it has decent future potential in the cryptocurrency space.

 

Price analysis on DAI

DAI was initially launched in 2017, and its price analysis tracks back to as early as 2019. The price analysis on DAI for the past two years is indicated as follows:

 

  2019 2020 2021 to date
DAI Price High $1.01 $1.093 $1.01
DAI Price Low $0.99 $0.96 $0.98
Market Cap $1.17B $9.33B

 

Price prediction on DAI

DAI is a stablecoin and pegged to the United States Dollar, which means that the price should not fall far below or rise above that of the US Dollar. However, experts predict that the value of DAI is set to increase to $0.993 by the end of 2022.

 

Which wallets are the best option for storing DAI?

A DAI crypto wallet can be explained as a software application that can be used to store the necessary data to access their DAI funds. This data will include a private key (like a password) and a wallet address or public key (which acts as an account number).

In terms of the types of DAI wallets, the following are known as the best options:

  1. MyEtherWallet
  2. MetaMask
  3. Edge Wallet
  4. Trezor
  5. Ledger Nano S

 

1. MyEtherWallet: MyEtherWallet (MEW) is a free and open-source cryptocurrency wallet. With the wallet, users can easily trade their digital assets without having to visit external platforms or exchanges.

It also supports hardware wallets for those who retain their money in a physical location. MyEtherWallet is offered as a SaaS and for Android and iOS.

 

2. MetaMask: MetaMask functions as an Ethereum wallet and internet plugin for Chrome, Edge, and Firefox. To keep the user's keys for Ether and ERC-20 tokens across compatible browsers, it links them to the Ethereum blockchain.

It is also linked to two exchanges: Coinbase and ShapeShift, allowing you to buy Ether and ERC-20 tokens straight from both.

 

3. Edge Wallet: Edge Wallet is highly safe, secure, and easy to use. The wallet only supports a few cryptos now but hopes to add more shortly.

The Edge wallet already includes a proprietary. 

 

4. Trezor: Trezor wallets are among the best cryptocurrency wallets available. It has great security, is easy to use, and offers great support and updates. Although it is more expensive than other crypto wallets, the functions it provides are worth it. Trezor is more secure than other hardware wallets.

 

5. Ledger Nano S: Ledger Nano S is well-known in the crypto market as one of the most popular and secure hardware wallets currently on the market. It is compact, yet it is also simple to use. It is well-supported and has a long track record of reliability in terms of security.

Best Bitcoin Wallets are the same as DAI wallets.

Where can you buy DAI?

DAI can be purchased from these crypto exchange trading platforms:

  1. Coinbase Pro
  2. OKEx
  3. HitBTC
  4. Binance
  5. Uniswap

 

1. Coinbase Pro: Coinbase Pro is a cryptocurrency exchange offered by Coinbase Global that is designed for skilled and active cryptocurrency traders. It is less expensive than the Coinbase platform and offers a broader selection of assets to trade, including more than 130 different cryptocurrencies.

 

PROS CONS
Even though it is designed for active traders, the exchange features a user-friendly interface Support responses can be slow
Lower fees are charged where there are higher trading volumes The platform is not suited to beginner traders
There are robust security features employed on the platform There is a limited number of indicators and overlays for charts
Advanced trading features are provided  

 

2. OKEx: OKEx is a cryptocurrency exchange that offers its traders a spot trading platform on several cryptocurrencies via a controlled trading platform. OKEx offers a plethora of tokens and futures trading pairs to assist traders in optimizing their approach.

 

PROS CONS
Offers 24/7 customer support to its clients The platform does not accept United States clients
There is an advanced trading platform offered across devices Unregulated
There is a wide range of advanced trading tools offered  
Beginner traders can use the range of educational resources to increase their trading skills  

 

3. HitBTC: HitBTC is a cryptocurrency exchange trading platform that caters especially for experienced cryptocurrency traders that want to trade in the alternative coin market. The exchange has high liquidity and does not impose KYC restrictions on its customers; however, it is suggested that users verify their accounts to avoid future complications.

Its large assortment of cryptocurrencies makes it an excellent spot to look for low-cap gems.

 

PROS CONS
The exchange provides its clients with a wide range of cryptocurrencies that can be traded There are several transparency issues
The platform is easy to use even though its interface seems cluttered Support responses can be slow
There is no mandatory KYC process The platform is not ideal for beginner traders
The trading costs are extremely low Unregulated exchange

 

4. Binance: Binance, founded by Changpeng Zhao, is a world-renowned cryptocurrency exchange. Users can buy, sell, or trade coins on it. Binance is a crypto exchange that is also at the center of the crypto environment.

It has a launchpad for aspiring businesses, data-driven analytics, a trusted wallet, a community-supported blockchain software program, an academy, and even a charity.

 

PROS CONS
The platform offers hundreds of digital assets and trading pairs to choose from, ensuring that there are many trading opportunities Debit card transactions are expensive
There are low transaction costs from 0.1% for spot trading and 0.5% for instant buy or sell The user interface can be confusing for complete beginners
There are charting capabilities and trading features ideal for advanced traders The platform does not support a variety of conventional payment methods
When traders use BNB on the platform, trading fees are reduced  
Client assets are insured  
Highly rated exchange with a high trust score  

 

5. Uniswap: Uniswap is one of the first widely used permissionless DEX that allows users to trade any ERC-20 token directly through a web 3.0 wallet. Users can do this without depositing or withdrawing to an order book.

Despite the competition that Uniswap faces, it is still one of the most popular DEX in the crypto market.

 

PROS CONS
Uniswap provides clients full control of their funds There are still reports of fake coins being listed 
There is no KYC process involved during registration There are reports of transaction failures 
Users have access to the newest coins as they launch  
The platform offers some of the lowest trading costs  

You can buy DAI safely from these cryptocurrency platforms.

Does DAI use coin burns?

DAI does not burn coins in the same way that other projects would. When users purchase DAI, new coins are minted, and when users sell their DAI, the corresponding number of coins is burnt.

 

Are there criticisms against DAI?

After a market meltdown in March 2020, engineers developed a contentious mechanism that allowed DAI to keep its peg with USDC.

When a key DeFi lending mechanism was upgraded in July 2020, DAI fell off its peg again, and the community decided to raise the system's debt cap.

Next, it prioritized GUSD and eight additional tokens for consideration as collateral, allowing them to be utilized to produce DAI and increase liquidity.

Recently, authorities have focused on stablecoins; the suggested STABLE Act in the US would require stablecoin issuers to the same criteria as banks.

This type of legislation might harm a decentralized stablecoin like DAI. If the STABLE Act passes, DAI validator nodes might be in breach of the law unless they are chartered banks.

 

What is DAI’s largest Competitor?

DAI's largest competitor is USDC.

Compared to DAI, USDC has a significantly lower level of volatility and a more established legal framework. DAI is more dangerous since it is decentralized, but USDC is more stable because it is centralized.

Even though DAI claims to be decentralized, USDC, which is backed by the US dollar, is a superior stable currency for investors because it is a conventional stable asset.

DAI is known for its high technical barrier to entry, and as a result, experts tend to be less concerned about USDC's centralized management. The Stablecoin's operator, the Centre Consortium, has built a reputation for openness and accountability.

 

What can DAI smart contracts do?

A smart contract is a computer program that runs on the blockchain platform and ecosystem of cryptocurrency projects such as Ethereum, Solana, and several others.

Smart contracts have several combinations of codes, which can be described as the contract's functions, and data, which is its state, that all reside at a specific address on the blockchain.

MakerDAO's smart contracts enable a decentralized application to produce DAI from an overcollateralized loan and repayment procedure. To borrow against the value of their deposits, users that deposit Ether (or other cryptocurrencies allowed as collateral) can get newly created DAI.

 

Is DAI a Good Investment?

Yes, DAI is a good investment because it serves as a strong tool, especially where users try avoiding the often-excessive volatility of so many other crypto coins whose values are regulated by the open market.

This makes stablecoins like DAI might an attractive option for retail traders and institutional investors. Additionally, DAI may reduce transaction fees and delays that impede trade execution in the crypto market.

This is especially true when utilizing traditional government currency, which may need to transit between banks, delaying the optimum execution of the trades. DAI allows customers to get loans in a manner that may be more advantageous than current possibilities.

Instead of following the tedious process involved with credit scores and checks by a bank or other financial institution, DAI holders can put up their Ether to obtain DAI in return.

 

What is the supply and distribution of DAI?

DAI has a circulating supply of 9,303,319,502 DAI, which changes according to the demand of users. There is no max supply of DAI because it is a stablecoin and its supply depends on its demand.

 

Is DAI a viable Alternative Coin?

Yes, DAI is a suitable alternative coin and stablecoin.

  • Traceability – Transactions are recorded in the public ledger without the identity of users becoming known.
  • Hacking – DAI is a part of the Ethereum blockchain, which has not been hacked successfully.
  • Security – DAI is a secure stablecoin that is backed by the US Dollar and kept safe by the Ethash algorithm of Ethereum.
  • Price Stability – DAI is pegged to the United States Dollar, making it significantly more stable than other conventional crypto assets.
  • Potential Investment – DAI can be used as a hedge against inflation and volatility, making it a solid potential investment.

 

What are the differences between DAI And Bitcoin?

Bitcoin is the first cryptocurrency that was created, and it is also the largest. Bitcoin is a store of value in addition to being a medium of exchange, with thousands of merchants accepting payment in Bitcoin.

Bitcoin is a mining-based coin, while DAI is minted according to demand. DAI is based on the blockchain of Ethereum, and it is an ERC-20 token that benefits from the technology of Ethereum, such as smart contracts, DeFi, and more.

 

  Bitcoin DAI
Price change 20/21 +400% 1.39%
Market Cap $800 Billion+ $9.2 Billion+
Past Hacks None None
Popularity Very High High
Altcoin Rank #1 – Original Crypto #22

 

What are the differences between DAI and Ethereum?

Ethereum is the largest alternative cryptocurrency on the market and a programmable blockchain where projects such as DAI can be created and launched.

Thus, DAI is an ERC-20 token that has access to a wide range of DApps and DeFi applications on the blockchain network. DAI and Ethereum do not compete as they were created for different purposes.

DAI is a stablecoin that is pegged to the US Dollar in a 1:1 ratio, and unlike other stablecoins, DAI is not backed by USD that is kept in a bank account but backed by collateral held on the Maker platform.

 

  Ethereum DAI
Price change 20/21 +880% 1.39%
Market Cap $460 Billion+ $9.2 Billion+
Past Hacks None None
Popularity Very High High
Altcoin Rank #2 #22

 

What are the differences between DAI and Dogecoin?

DAI is a stablecoin, while Dogecoin is an altcoin that is used as a medium of exchange. Dogecoin is cheaper than DAI but has a much higher market capitalization, and it is also more popular.

The circulating supply of Dogecoin is much higher, and DOGE is more volatile as well, especially considering that it is susceptible to changes in Bitcoin along with news reports.

 

  Dogecoin DAI
Price change 20/21 +7,300% 1.39%
Market Cap $22 Billion+ $9.2 Billion+
Past Hacks None None
Popularity High High
Altcoin Rank #12 #22

 

What are the differences between DAI and Neo?

Da Hongfei and Erik Zhan established NEO in China in 2014 under the name AntShares. In June of 2017, the company changed its name to NEO.

Using blockchain technology, NEO supports its own money and allows for the creation of virtual currencies and smart contracts. In this regard, it mimics the Ethereum blockchain network established in the United States.

Ether (ETH), not US money, serves as the backbone of DAI. When compared to the majority of stablecoins, DAI allows the value of cryptocurrencies to interact with real-world assets, unlike other stablecoins.

 

  NEO DAI
Price change 20/21 +160% 1.39%
Market Cap $1.70 Billion+ $9.2 Billion+
Past Hacks None None
Popularity Medium High
Altcoin Rank #69 #22

 

What are the differences between DAI and NFTs?

Nonfungible tokens (NFTs) are digital assets that each have a unique value, with no two NFTs holding the same characteristics or value as another. DAI, on the other hand, is fungible, which means that one DAI has the same value and characteristics as another DAI.

 

What are the differences between DAI and Solana?

Solana's transaction speed is one of its most appealing features. Solana may be the finest altcoin challenger to Ethereum due to its lightning-fast transactions.

An environment of cryptocurrency-powered products and services is being developed via the Solana blockchain network. Solana is distinct from Bitcoin, yet it has several aspects with Ethereum.

It offers quicker transaction speeds, reduced costs, and a coding capability that emphasizes adaptability across Ethereum's network.

Solana is the same type of platform where projects such as DAI can be launched, allowing them to benefit from the innovative technologies and security of the network. DAI is a stablecoin that functions on Ethereum, while Solana is one of the top programmable blockchains in the crypto space.

 

  Solana DAI
Price change 20/21 +9,300% 1.39%
Market Cap $54 Billion+ $9.2 Billion+
Past Hacks None None
Popularity Very High High
Altcoin Rank #5 #22

 

What are the differences between DAI and Cardano?

Cardano is another popular programmable blockchain that uses an Ouroboros algorithm and a Proof-of-Stake consensus mechanism.

Founded on peer-reviewed research, Cardano is a decentralized proof-of-stake (PoS) network Bitcoin and Ethereum's proof of work antecedents, such as Litecoin and EOS, have been criticized for their scalability and other shortcomings. 

Cardano is a massive initiative that allows developers to create and launch smart contracts, DApps, and DeFi applications. DAI is a USD stablecoin that can be used to transfer value and as a medium of exchange.

 

  Cardano DAI
Price change 20/21 +2,100% 1.39%
Market Cap $42 Billion+ $9.2 Billion+
Past Hacks None None
Popularity Very High High
Altcoin Rank #7 #22

 

DAI is a stable cryptocurrency. Does this make it safe for investment?

Yes, it is widely accepted that stablecoins are a secure long-term investment because of their stable price.

 

Is DAI a stablecoin?

Yes, DAI is a decentralized stablecoin that exists on the blockchain of Ethereum.

 

What is a whitepaper?

A whitepaper is a document that is released with a crypto project, providing potential investors and interested users’ technical information about the project's concept, its roadmap, and how the project intends to expand and exceed.

 

Does every cryptocurrency have a whitepaper?

Yes, all legitimate cryptocurrency projects must have a whitepaper.