What is DAI?

DAI is a stablecoin that is designed to maintain a stable value of one US dollar. Unlike traditional cryptocurrencies, the value of DAI is not subject to the same level of volatility as other cryptocurrencies such as Bitcoin or Ethereum.

The DAI stablecoin is issued by the MakerDAO protocol, which is built on the Ethereum blockchain. It is collateralized by other cryptocurrencies, such as Ether (ETH), which are locked in smart contracts on the Ethereum blockchain. This collateralization mechanism helps to maintain the value of DAI at or near one US dollar, even in times of market volatility.

Users can obtain DAI by locking their cryptocurrency assets as collateral on the MakerDAO platform, and then minting DAI against this collateral. The collateralization ratio must be maintained at a certain level to ensure the stability of the DAI stablecoin.

One of the key benefits of DAI is that it can be used for decentralized applications (dApps) and smart contracts that require a stable value. This makes it a useful tool for decentralized finance (DeFi) applications, such as lending and borrowing platforms, where stablecoin values are important.

Overall, DAI represents an important innovation in the cryptocurrency space, offering a stable value alternative to other volatile cryptocurrencies. Its use of collateralization and smart contracts make it a useful tool for decentralized finance applications and for users who require a stable value for their transactions.

The article does not constitute financial advice.

Start with crypto today

Sign up on NBX, a trusted Norwegian cryptocurrency exchange and custodian, and kickstart your crypto journey safely.
Crypto 101
Explore the most popular crypto terms and find answers to your questions.

How is blockchain secured?

Read

What is a crypto trading bot?

Read

What is a DApp?

Read

What is Monero?

Read

What is a time horizon?

Read

What is Tether?

Read

What is the difference between Ethereum and Bitcoin?

Read

What is staking?

Read

What is penetration testing?

Read
Blog

Insights, Trends, Analysis

Unraveling the cryptocurrency industry revolution.
#crypto101

Ethereum finally breaks 3800$ as it overtakes Mastercard in valuation

Ethereum finally broke the 3800$ level and overtook Mastercards market cap en route to doing so. Learn more here.
2 minutes
2024-03-05
#crypto101

AI tokens surge as NVIDIA announces record quarterly earnings

AI-related tokens surged shortly after NVIDIA posted their earnings for the fourth quarter. Learn more here.
2 minutes
2024-02-22
#crypto101

What happened with Ethereum - week 1 in review: Ethereum (ETH)

Many decided to buy Ethereum during the first week of the year. Learn why here.
2 minutes
2024-01-11
Cookie Consent

By clicking “Accept”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. View our Privacy Policy for more information.