DAI is a stablecoin designed to be softly pegged to the US dollar. It’s decentralized, neutral, supported by collateral, and sits at the center of the MakerDAO lending ecosystem. At the moment, MakerDAO is among the biggest and most established dApps operating on the Ethereum blockchain.

With the MakerDAO protocol, anyone can use ETH to borrow against themselves, receiving DAI stablecoin. DAI is built to limit volatility and curb sharp price swings, which helps it stay resistant to hyperinflation. In practice, people anywhere can mint Dai using crypto collateral assets.

DAI in its current form was introduced in 2018. MakerDAO issued the new Multi-Collateral Dai token. This came in place of the earlier version, which was rebranded as SAI (Single-Collateral Dai).

After Single-Collateral Dai launched in 2017, Dai’s momentum increased alongside wider stablecoin adoption across the industry. Stablecoins are cryptocurrencies built to keep their price stable and behave similarly to FIAT currencies. As stablecoins gained traction, they became a key component of DeFi decentralized applications.

What are Multi-Collateral DAI key features and how does it work?

MakerDAO operates when users lock ETH into smart contracts within the MakerDAO network. After that, network participants can borrow up to a fraction of the collateral’s value, which is determined by the Liquidation Ratio tied to a specific vault. The more ETH placed in the smart contracts, the more DAI can be generated. To retrieve the locked ETH, the borrower must repay the DAI loan plus any associated fees. The DAI stablecoin system can also use any ERC-20 asset approved by MKR holders as collateral.

The DAI produced is maintained through the collateral assets deposited into Maker Vaults under the MakerDAO Protocol. The collateral value must be greater than the overall value of the DAI issued to the user. There’s also an incentive to lock collateral, since users can deposit more volatile assets and receive stablecoin in return-helping reduce their overall risk exposure. Common collateral options include ETH and USDC.

Within the Maker Protocol model, two tokens are used. One is the collateral-backed DAI stablecoin. The other is MKR, which is used for protocol governance. MKR enables stakeholders to oversee the system and manage the DAI stablecoin. For instance, MKR holders must vote and approve each ERC-20 token before it can be accepted as collateral. One MKR token corresponds to one vote.

MKR is an ERC-20 token on the Ethereum blockchain, and it can be minted or burned depending on how closely the DAI stablecoin tracks the US dollar. 

What can Multi-Collateral Dai (DAI) be used for?

Once you hold DAI, you can use it like any other cryptocurrency. For example, it can be transferred to other users, traded and exchanged for other cryptos, and used to pay for services. You can also keep DAI as savings via Maker’s DAI Savings Rate (DSR).

DAI is also used as a deferred payment tool for settling obligations within the MakerDao Protocol.

Where can you buy DAI?

You can buy and trade DAI on the CEXs and DEXs listed here.