There are hundreds, if not thousands, of altcoins available. It’s possible to become overwhelmed by the sheer quantity of options out there.
Dai is the answer for those who want a stable coin that doesn’t fluctuate like Bitcoin or Ethereum. Dai is backed by collateral, so it’s always worth $1 USD, even when the market crashes. It’s also easy to buy with just one click on Coinbase!
How does Dai work?
Dai is a type of collateral token, meaning it’s pegged to the US dollar like Tether (USDT). But unlike Tether, Dai has no counterparty risk. That means there’s no chance one entity will refuse to honor its side of the agreement and fail to create or destroy Dai as required by users. You can buy and sell Dai at any time, although it may be difficult to find a buyer during a crash.
Ethereum smart contracts govern the creation and destruction of Dai. When someone wants to create an amount of Dai, they send Ether to a Collateralized Debt Position (CDP). A smart contract then creates the equivalent amount of Dai for them.
Someone holding Dai can take out a Collateralized Debt Position to receive Ether in return as long as there’s enough collateral in the smart contract. If a user wants to close a CDP before paying off, they must pay a stability fee.
The benefits of using Dai as your currency
Dai is designed to be stable, but that doesn’t mean it’s not flexible. It offers benefits over other cryptocurrencies that might typically be used as a store of value or medium of exchange.
Anyone who uses a cryptocurrency for a transaction should consider the price volatility before they make a purchase. If you’re holding Bitcoin and Ethereum to buy something in the future, there’s a good chance the value of those coins will increase by then. That means you’ll end up paying more USD for the same item.
Not only that, but transaction fees are also an important concern for day-to-day expenses like buying coffee or groceries.
With Dai, users can make transactions for free and avoid transaction fees. With no middlemen, there’s also less chance of the payment being reversed.
Additionally, it doesn’t matter which country a user is in or what kind of fiat currency they deal with. People can trade using Dai, with all the benefits of using cryptocurrency, without worrying about devaluation due to international exchange rates.
DAI vs Tether (USDT):
A currency that is very similar to Dai but has different benefits or drawbacks! This coin is also pegged to the US dollar and popular for its stability. However, it’s centralized and sometimes lacks transparency regarding its reserves. It’s important to note that USDT has no third-party risk because there are always equal numbers of tokens in circulation as dollars are backing them. That means if there’s a shortage of USDT tokens, it can be difficult to determine whether this is due to market demand or a third party who holds the funds.
How to Buy DAI
It’s simple to purchase and store your own Dai as a cryptocurrency user, but that’s not the case for everyone. People who want to use this type of currency have no chance to buy it if they don’t have Ethereum or BitCoin, so they’ll need a third-party service like Coinbase.
Coinbase is a digital currency exchange that lets users buy cryptocurrency with fiat currency. The fees are low, and it’s easy to use once you have an account.
You can store your Dai in an Ethereum wallet like MyEtherWallet or by using the mobile app MakerDAO DAI Wallet or in a wallet that supports the ERC20 token. This includes MetaMask and Exodus.
How to sell DAI
If you want to get rid of your Dai, just send it back and receive Ether in return. You can do this by sending your tokens back to the CDP that created them or by closing the Collateralized Debt Position.
History of Dai (DAI)
Dai was released in December 2017 after a successful ICO and had been evolving ever since. MakerDAO is an organization that governs the platform and actively upgrades it, adding features like USD Coin support.
The release of Dai represented the first decentralized stable coin and the launch of Ethereum’s second-generation token standard, ERC20.
David Sacks (the creator of PayPal) and legendary VC investor Bill Tai recently joined the MakerDAO advisory board, giving Dai a vote of confidence from two established business leaders.
(Summary) Final thoughts about why you should consider using Dai for your everyday crypto-currency transactions!
Dai is an excellent choice for people who want to use cryptocurrency but don’t like the volatility of other coins. With free transactions and no risk of payment reversals, this coin offers benefits over traditional cryptocurrencies like Bitcoin or Ethereum.
You also don’t need to own these more popular coins to use Dai; it’s easy to convert your cash into this stable coin through a third party like Coinbase or MintBit.
Dai (DAI) FAQ’s
How do Ethereum smart contracts make Dai a safe coin?
Dai’s Ethereum smart contract is decentralized and autonomous, meaning that it acts as its own authority with no need for third-party involvement. This system ensures that everyone plays fairly without the risk of one person failing to control supply or refusing to destroy tokens when necessary.
Can I mine DAI tokens?
You can’t mine DAI as it’s based on Ethereum and acts as a cryptocurrency. To get tokens, you can purchase them from an exchange, convert fiat currency to Ether and send it to the CDP smart contract.
What is the market cap of DAI?
No total fixed supply dictates a coin’s market cap; this figure changes based on how many coins are in circulation (and therefore available for trading).
Where do I buy DAI from?
DAI is available from several exchanges, including Binance, Bitfinex, and Ethfinex, but you can also buy it through MintBit or Coinbase.
What determines the price of DAI?
The price changes as supply and demand fluctuate based on the value of Ether. If more people want the coin, the price goes up. If demand drops off, so does its value.
What makes DAI different from USDT?
Dai is much more transparent than Tether and has no third-party risk associated with its token supply. 1 Dai is equal to USD 1, making it the digital equivalent of the greenback.