Dai Price (DAI)

Dai (DAI) is a decentralized stablecoin cryptocurrency that operates on the Ethereum blockchain. It was created by MakerDAO, a decentralized autonomous organization (DAO), with the aim of providing a stable and decentralized digital currency that is not subject to the same market volatility so often associated with other cryptocurrencies like Bitcoin or Ethereum.

Dai is pegged to the value of the US dollar. This means that the value of 1 Dai is always intended to be equivalent to 1 US dollar. This stability is achieved through a system of smart contracts and collateralization.

To create Dai, users must lock up a certain amount of Ether (ETH), which serves as collateral. This collateral is held in a smart contract called a Collateralized Debt Position (CDP). Users can then generate Dai against this collateral by using the CDP as security.

One of the key advantages of Dai is its decentralization. Unlike traditional stablecoins that are backed by a central authority or held in a bank account, Dai operates entirely on the Ethereum blockchain, utilizing smart contracts for its functionality. This means that no single entity has direct control over the supply or value of Dai, making it resistant to censorship and manipulation.

Dai has become increasingly popular in decentralized applications (dApps), providing a stable and reliable medium of exchange within the decentralized finance (DeFi) ecosystem.

Dai price history

DAI is a stablecoin pegged to the US dollar. Therefore, its value always hovers around $1 per DAI (+/- $0.001). However, there have been instances where Dai's price fluctuated from this threshold, before returning to the $1 mark.

2017-2019

The price of DAI remained relatively stable until 2019, trading between $0.9999 and $1.01 for most of the year.

2020

The DAI price was noticeably volatile, particularly in the first half of 2020, reaching heights of $1.14 per token in September. This price volatility can likely be attributed to the start of the COVID-19 pandemic.

2021

The cryptocurrency market experienced a tremendous bull run in 2021, but DAI remained stable throughout, except in the month of September when it briefly hit an all-time high of $3.67.

2022

The DAI token was stable in 2022, hovering between a price of $0.9995 and $1.001.

2023

DAI was stable throughout 2023, except a large dip in March when it reached its lowest price at $0.9729.

How does Dai work? 

Unlike traditional stablecoins that are backed by fiat currency reserves, Dai achieves its stability through a decentralized mechanism involving smart contracts and collateralization. The primary collateral used to back Dai is Ether (ETH), the native cryptocurrency of the Ethereum blockchain. Users who want to generate Dai can deposit their Ether into a smart contract called a Collateralized Debt Position (CDP). The deposited Ether serves as collateral, and based on its value, users can create and borrow an equivalent amount of Dai.

The amount of Dai that can be generated is determined by the collateralization ratio, which is set by the Maker protocol. Initially, the collateralization ratio was set at 150%, meaning that for every 1 Dai generated, there had to be $1.50 worth of ETH locked up.

If the value of the collateral falls and the collateralization ratio breaches a predetermined threshold (currently set at 150%), a user's CDP may be liquidated. This means that the collateral is sold off to repay the generated Dai, which helps maintain the stability and solvency of the Dai system.

To maintain stability, the MakerDAO system employs the System Stabilizer Module. If the value of Dai starts to deviate from the target price, an incentive is created to either increase or decrease the supply of Dai in circulation. For example, if the price of Dai rises above $1, users can create and sell new Dai tokens, which helps bring the price down. Conversely, if the price falls below $1, users can purchase and burn Dai, reducing the supply and raising the price.

Who founded Dai?

Dai (DAI) was created by MakerDAO, a decentralized autonomous organization that developed the stablecoin and the underlying software protocol, Maker Protocol. While there isn't a specific individual or group considered as the founders of Dai, the MakerDAO project was initiated by Rune Christensen.

Rune Christensen is a prominent figure in the cryptocurrency space and has played a pivotal role in the development and governance of MakerDAO. He has been instrumental in driving the vision and implementation of the Dai stablecoin and the Maker Protocol.

What is Dai used for?

Dai serves multiple purposes within the cryptocurrency ecosystem. It provides relatively stable value storage, offering an alternative to volatile cryptocurrencies like Bitcoin or Ethereum. Individuals can hold or save their assets in Dai with less risk of significant market fluctuations due to its peg to the US dollar.

The stablecoin also functions as a medium of exchange, enabling users to conduct everyday transactions. Dai's fast and secure nature allows for quick and reliable transfers, making it possible for individuals to make purchases or send funds without relying on traditional banking systems. Its utility as a medium of exchange brings convenience and accessibility to users seeking to transact with a stable and decentralized digital currency.

Additionally, Dai facilitates low-cost and efficient cross-border remittances. Leveraging blockchain technology, individuals can send Dai to recipients anywhere in the world, bypassing intermediaries and reducing transaction fees. This feature makes Dai an attractive option for individuals seeking to streamline and simplify the process of sending money across borders, promoting financial inclusion and accessibility on a global scale.

What makes Dai unique?

Dai is unique in that it is a decentralized stablecoin that offers stability, transparency, and decentralization in the volatile world of cryptocurrencies.

Unlike other stablecoins that are backed by a central authority or held in a bank account, Dai operates entirely on the Ethereum blockchain through smart contracts, eliminating the need for trust in a centralized entity. Its value is maintained through a system of collateralization and smart contract mechanisms, providing stability and pegging it to the US dollar.

This decentralization and stability make Dai a versatile digital currency that can be used for various purposes, including international business transactions, remittances, and participation in DeFi.

How can I mine or stake Dai?

Dai (DAI) cannot be mined or staked in the traditional sense like other cryptocurrencies such as Bitcoin or Ethereum. Dai is a stablecoin that operates on the Ethereum blockchain, and its issuance is not based on a mining or staking process.

The creation of Dai involves a different mechanism called "collateralization." Users can create Dai by locking up collateral assets, typically in the form of Ether (ETH), in a smart contract called a Collateralized Debt Position (CDP). The amount of Dai that can be generated is determined by the collateralization ratio set by the MakerDAO system.

To generate Dai, you would need to interact with the Maker protocol and follow the specific processes and requirements set by MakerDAO. This typically involves accessing platforms or interfaces that allow you to create and manage CDPs, such as the MakerDAO official website or compatible decentralized finance (DeFi) platforms.

It's important to note that the process of generating Dai involves risks, including the potential liquidation of your collateral if it falls below the required collateralization ratio. It is recommended to thoroughly understand the mechanisms, risks, and requirements associated with generating Dai before participating in the process.