Deep Dive
1. Purpose and collateral
Unlike a token backed solely by dollars held in a bank, DAI is created through a system of collateral deposited into smart contracts. These contracts help manage issuance and support DAI’s target value near one US dollar. The underlying protocol began as Maker and is now part of the Sky ecosystem. CoinMarketCap The Defiant
2. How it is used
DAI is an Ethereum based, ERC 20 compatible token. It can be transferred between wallets or used in DeFi services such as lending and trading. Its value is intended to be steadier than that of many cryptocurrencies, but it is not guaranteed to remain exactly at its target: collateral value changes, smart contract issues, or market stress could affect the peg.
Conclusion
DAI is a blockchain based digital dollar supported by collateral and protocol rules, rather than simply a claim on cash in a bank. How will the Sky ecosystem develop DAI’s role alongside its newer stablecoin, USDS?
