The DAI coin is a decentralized stablecoin that de-links itself from traditional fiat currency by using smart contracts on the Ethereum blockchain. Unlike other stablecoins that may rely on a single asset to maintain their value, DAI operates within a system of collateralized debt positions (CDPs).when a user wishes to create DAI, they must lock up cryptocurrency as collateral, typically ETH or other ERC-20 tokens, in a smart contract. The system then generates DAI based on the value of the collateral deposited, ensuring that it remains stable at approximately $1 USD, thereby offering users a reliable medium of exchange and store of value in the frequently enough volatile world of cryptocurrencies.
- Stability thru collateralization: DAI is backed by a variety of digital assets,allowing it to maintain its peg to the dollar.
- Governance by MakerDAO: DAI is governed by the MakerDAO community, which votes on critical aspects like stability fees and collateral types.
- Transparency: All transactions and collateral can be audited on the Ethereum blockchain, promoting trust among users.
| Feature | Description |
|---|---|
| Decentralization | Not controlled by any central authority,enhancing security and autonomy. |
| Collateral type | Users can deposit various crypto assets, such as ETH, BAT, and others. |
| Use Cases | Payments, savings, and as a hedge against market volatility. |
