Dai (DAI)

Overview

Dai is a decentralized stablecoin created by MakerDAO and designed to maintain a value close to 1 US dollar. Unlike fiat-backed stablecoins, Dai is primarily supported through overcollateralized crypto assets and smart contract-based monetary mechanisms.

Key Features

• Speed: Depends on the underlying blockchain network
• Fees: Variable — depends on Ethereum or other supported networks
• Security: High — secured by smart contracts, collateral design, and the underlying blockchain
• Consensus type: N/A — issued on top of existing smart contract blockchains
• Smart contracts: Yes — deeply integrated into smart contract and DeFi systems
• Ecosystem size: Very large in DeFi, lending, and on-chain treasury management

History & Background

Dai launched in 2017, created by MakerDAO community. To create a decentralized digital dollar that works without a centralized issuer holding fiat reserves

• 2017: Single-collateral Dai launches on Ethereum
• 2019: Multi-collateral Dai expands the system beyond a single backing asset
• 2020: Dai becomes a core stablecoin within DeFi lending and trading
• 2024: MakerDAO ecosystem shifts branding toward Sky while Dai remains historically important

How It Works

Dai is minted through smart contracts when users lock approved collateral into Maker-style vaults. Stability is maintained through overcollateralization, interest-like protocol parameters, liquidation rules, and governance mechanisms.

Consensus Mechanism

Dai does not have its own blockchain consensus mechanism. It depends on the security of the smart contract blockchain it runs on, while peg stability is maintained by protocol incentives and collateralization rules.

Tokenomics

• Total supply: No fixed maximum supply — expands and contracts with collateral usage and demand
• Circulating supply: Circulating supply varies with protocol minting and redemptions
• Issuance schedule: Minted and burned according to collateral positions and protocol demand
• How new coins are created: Created through decentralized collateralized debt positions managed by smart contracts
• Utility: Stable store of value, DeFi collateral, borrowing, liquidity, payments, and treasury management

Use Cases

Strengths

• Decentralized stablecoin model with deep DeFi integration
• Strong brand recognition within crypto-native finance
• Does not rely on a single centralized fiat custodian in the same way as USDC or USDT

Limitations

• More complex than fiat-backed stablecoins
• Dependent on collateral quality, governance, and protocol risk controls
• Can face peg pressure during market stress or rapid collateral volatility

Supported Networks

• Ethereum: Primary network for Dai and Maker-style stablecoin infrastructure
• Other networks: Also available through supported bridges and ecosystem integrations on additional chains

How to Store It

DAI can be stored in Ethereum-compatible wallets, hardware wallets, and DeFi interfaces, or held on supported exchanges. Learn more on our wallets guide.