Dai (DAI) is a rather unusual crypto, being a stablecoin. While the blockchain is full of similar tokens, this one stands out from the crowd by offering real utility and a genuine investment opportunity.
In this guide, we’ll look in detail at what Dai is and why its existence is essential to DeFi. Then we’ll look at the different ways of buying Dai. Finally, we’ll give you our take on the Dai crypto.
The history of Dai (DAI)
Dai is a stablecoin based on the Ethereum blockchain. Token issuance and development are fully supported and managed by the Maker protocol. Dai also has its own DAO (Decentralized Autonomous Organization) called MakerDAO.
The price of DAI is indexed directly to the US dollar. In addition, the stability of Dai value is guaranteed by a mix of other tokens, which are deposited in secure vaults each time a new token is created.
Dai is reputed to be the decentralized token par excellence. In fact, its creation led to the development of numerous DeFi concepts. If, today, many stablecoins exist on DEX, it’s mainly because the Dai has positioned itself as a true exemplar.
Without this crypto, DeFi would not have been able to evolve so rapidly. Today, many DEXs offer DAI for exchange. Like USDT, the most widely used stablecoin today, DAI represents a decentralized, autonomous version of the dollar within the blockchain.
Dai came into being in 2017 after an announcement; Dai founder is Rune Christensen, a Danish entrepreneur. Native to the Maker protocol, the token is of type ERC-20, so it’s based on the Ethereum blockchain, as we saw earlier. The originality of the Dai is its decentralized aspect, which is even reflected in its foundations. Indeed, the token was not created by a single person or a small group of individuals. The Dai crypto was created by a complete community of individuals, who were already present in the Maker protocol.
Maker, for its part, is a DAO, a kind of private company, which is managed in a decentralized, independent and autonomous way. It is managed via voting phases, thanks to the smart contracts present on the platform. In this way, Maker is democratically managed by the holders of Maker Governance Tokens (MKR).
The price of the Dai is obviously stable, maintaining an equity ratio of 1:1 with the US dollar. However, a significant peak at $1.1 was seen in May 2020. The lowest Dai stock price ever reached by the token is $0.97, early 2020 according to CoinMarketCap. today, the Dai price to USD is around$0.9979.
What is Dai and why was it designed?
The Dai meets an important need for stability within the crypto sphere. Indeed, the main characteristic of crypto-currencies lies in the high volatility of tokens in general. Within decentralized organizations and DeFi, it was therefore necessary to opt for a stable, alternative solution to the dollar, while keeping in mind the idea of anonymity and transparency.
The Dai makes it possible to use a reference value equal to the US dollar without having to resort to traditional finance.
It is also important to note that Dai, by its very nature, is not managed by any entity. Each token owner has a say in the direction of the DAI. Consequently, all instances of token issuance and creation are managed and publicly recorded by the smart contracts, which are powered by Ethereum.
The whole system around Dai is conducive to anonymity, transparency and decentralization. What really sets this token apart from other cryptos, and more particularly from other stablecoins, is its democratic management. Through direct voting, users have the opportunity to voice their opinions and bring about major changes to the platform.
How does Dai work?
Dai is currently the 4th most widely used stablecoin among crypto holders. It’s also important to highlight the opportunities offered by Dai is the Maker protocol. In addition to the possibilities of staking cryptos with annual returns, Dai has also enabled the development of Vaults and pools, which are used to secure and contribute to the network more efficiently.
Since Dai blockchain is directly dependent on a DAO, it has a mode of issuance that is still considered innovative today. While most other cryptos are issued under the decision of a team of experts, Dai is a major exception to the rule. Compared with Bitcoin, which is programmed to release new tokens at defined points in time, Dai works in a completely different way.
In order for new coins to be minted and put into circulation, a voting phase must be created and a majority must approve the process. The creation of the token was made possible by injecting Maker Vaults assets into the Maker protocol.
In effect, users are able to access the Maker protocol and create Oasis Borrow vaults. On Oasis Borrow, users can then lock crypto collateral. They can then borrow assets in exchange for their collateral, which is recorded in Dai. The collateral ratio is generally between 101% and 175%, but the rate obviously varies according to the risk level of the asset that was previously locked.
Where to buy DAI?
If you’d like to buy Dai and participate in the development of DeFi, there are several solutions available to you. Staking Dai allows you to earn rewards on DAI that would otherwise be sitting in a wallet. Below are two examples of centralized exchanges and one decentralized exchange. It’s up to you to make your choice according to your preferences.
If you don’t know how to buy Dai on a DEX, then it may be best to turn to Binance. The platform is the number 1 choice of most investors worldwide, and its selection of crypto tokens needs no introduction.
Binance offers a wide range of tokens, including those from DeFi. The platform offers a quick registration process, but you’ll need to verify your identity. Once this process is complete, you’ll be able to buy Dai quickly and easily using your credit card.
Binance also offers a wide range of DeFi solutions. From staking formulas to vaulting, the platform offers investors numerous opportunities, as well as interesting versatility in its offerings. All in all, Binance is the best choice for most crypto-currencies.
If you’re really interested in DeFi is web3, then you’ll probably prefer OKX. The interface is easy to get to grips with and looks a bit like Binance’s, apart from a few details.
In practice, OKX is a crypto-currency trading site. Its range of tools and dedicated functions is relatively broad, and the choice of cryptos is equally wide. However, OKX positions itself a little more midway between traditional finance and DeFi. Many users are quick to define the platform as a gateway to DeFi.
In addition to its range of tokens and NFTs, OKX also offers the Dai rate in euros. Registration is similar to that of Binance. As a result, you’ll need to provide your identity documents. OKX remains above all a centralized exchange, with the advantage of offering visibility on the web3.
Uniswap is a DEX (Decentralized Exchange). Unlike Binance and OKX, you won’t need to prove your identity to buy Dai at the best price. A simple connection to your wallet will suffice to buy Dai. However, you will need to bring an exchange currency with you in order to proceed with your exchange.
Since this is an Ethereum-based token, converting from ETH to DAI is a good compromise. Uniswap won’t charge you any fees, but you will of course have to pay the network’s gas fees. These are mainly used to reward miners and ensure optimal blockchain security.
Uniswap remains a choice option for 100% DeFi investors, since transactions are anonymous, decentralized and transparent. Ultimately, therefore, it is the most widely used option for buying Dai (DAI).
What about Dai future? Will Dai recover? It’s important to remember that Dai is a stablecoin. Its value is guaranteed at an equity of 1:1 with the US dollar. This can be both an advantage and a disadvantage for token holders. Indeed, even if the price of the token is stable, you need to be careful about the value to which it is attached.
If you believe that the US dollar still has a bright future ahead of it, you should probably invest in Dai.
If, on the other hand, you think the US dollar will eventually collapse, then your prediction for the Dai crypto is probably a little less optimistic.
Generally speaking, however, at the present time, Dai represents a very good opportunity in terms of technological and economic advancement. Even if the US dollar were to fall, the token ecosystem would still be in place.
Investment in this stablecoin should be made not for the monetary value of the token, but rather for the ideology it represents and the functionalities it offers. Dai is effectively positioned as a utility token in combination with MKR.
Advantages and disadvantages of Dai
Very low volatility
Very low investment risk
Participation at DeFi
Interesting community aspect
Not really affected by market fluctuations
Reduced trading opportunities due to low volatility
Slightly complex operation for beginners
There are many alternatives
If the US dollar collapses, the Dai collapses with it
Our final opinion on Dai (DAI)
You now know what Dai really is, what it’s used for and why it was created. So, what is Dai prediction? Will Dai go up? As we’ve seen, it’s relatively easy to buy at the best price, on CEX but also on DEX. Crypto Dai’s price prediction seems relatively stable due to its nature and modus operandi. We have also presented various scenarios for the token’s price evolution. Above all, however, Dai represents an ideology and an opportunity for access to DeFi.
Like other stablecoins on the web3, the Dai mainly enables secure, transparent and anonymous transactions. In fact, the ecosystem created by Maker and the DAI offer complete economic independence if you take the time. Finally, if you’d like to buy Dai, you can refer to the various platforms we’ve provided.
FAQ - Frequently asked questions about crypto Dai
What is DAI?
Dai (DAI) is a stablecoin that offers various opportunities within decentralized finance. In our guide, we explain how Dai represents a real step forward in crypto-currencies.
Is Dai (DAI) a good investment?
To understand whether Dai is a good investment, we need to understand what this rather unusual crypto is all about. To help you, we present two possible scenarios for its price evolution.
How to buy DAI?
To buy Dai (DAI), you can choose between two options: the centralized method, and the decentralized method. Whatever your preference, we present 3 different options in our dedicated guide.
What's the Dai for?
Dai has been one of the major pillars of DeFi for several years now. Created in 2017, the token quickly established itself as an essential part of the Ethereum blockchain and web3.