What Is Dai
The DAI cryptocurrency token is one of the first decentralized as well as collateral-backed cryptocurrencies, which has the main aim of maintaining a stable 1:1 value with the U.S. dollar through the process of locking other cryptocurrency assets in what is known as contracts. DAI is a product from the Maker Protocol, which is a decentralized application or dApp that runs on top of the Ethereum Blockchain. As such, DAI
DAI is a cryptocurrency asset that is collateralized by other cryptocurrencies, which means that if a user wishes to get DAI, they have to spend ETH in order to purchase the dollar equivalent of DAI on an exchange. They always have the possibility of collateralizing ETH and other assets through the usage of a Market Maker.
The Collateralized Debt Positions or CDPs are smart contracts that users can use in order to lock their collateral assets which in turn allows them to generate DAI.
DAI maintains its value by using collateralized debt, which is denominated in Ethereum's native cryptocurrency ETH.
These collateralized loans essentially provide a way through which a lender can secure a loan by using assets that they already own. These loans have a lower interest rate when compared to unsecured loans due to the fact that they allow lenders to seize the assets and sell them if the borrowers are, for whatever reason, unable to pay off the loan in question. All of this impacts the DAI price.
DAI Founders
DAI was originally founded in 2014 by Rune Christensen. Keep in mind that the Maker Foundation created the Maker Protocol.
Remember that DAI wasn't really created by a single person or organization, it is the development of software that powers it, and the insurance of new tokens is fully governed by the MakerDAO and Maker Protocol.
The Maker Protocol is an open-source based project that has the main intention of operating a credit system that allows users to take out loans that are fully collateralized by cryptocurrencies.
Furthermore, DAI was officially launched on this Maker Protocol in 2017 as a way to provide a lending asset that isn't volatile.
What you need to be aware of here is the fact that the Maker Foundation gave up control over the software behind MakerDAO.
This means that MakerDAO is a decentralized autonomous organization, which can be defined as a company that runs decentralized through the usage of smart contracts and has self-enforcing agreements which are expressed in its software code and then become fully executable on the Ethereum blockchain.
How Does DAI Work
One of the main reasons why the DAI price remains so stable is due to the fact that it is a stablecoin. This offers traders a powerful tool when it comes to avoiding the volatility that is present in many cryptocurrencies, the prices of which are determined by the market itself.
If you move value to DAI, you can reduce the risk of exposure to a price drop, such as one that would be present in cryptocurrencies such as Bitcoin or Litecoin, to name a few examples.
It is also used for another reason, and this is due to the fact that it removes transaction costs as well as delays that occur through the usage of traditional government currencies that might need to move between banks, which delays the execution time. As such, DAI can be defined as a cryptocurrency that offers you the ability to access loans in a way that can offer advantages when compared to pre-existing traditional options.
You might be interested in purchasing DAI due to the fact that it offers efficiency as well as transparency benefits of cryptocurrencies while also giving you protection from the volatility of the prices, as seen in other cryptocurrencies.
Where Can You Buy DAI
There is also multi-collateral DAI, and the DAI tokens maintain a stable value. It is a fully decentralized stablecoin with its own circulating supply and maker platform, where DAI holders have the opportunity to use the cryptocurrency throughout the DAI stablecoin system. There is also DAI savings rate as well as single collateral DAI, all of which contributes to the maintenance of decentralized finance. This means that it has a stability fee, works in a decentralized manner, and offers economic freedom. All of this is made possible through the Maker Platform. New DAI is constantly released into circulation.
If you want to buy, sell or trade DAI, you can do so on SushiSwap, Bkex, Binance, Coinbase Pro, Uniswap V2, and Bitinka.
