Dai is an Ethereum-based algorithmic stablecoin that is soft-pegged to the US dollar. It is managed and governed by MakerDAO, a decentralized autonomous organization (DAO) consisting of MKR token holders, who participate in decision-making affecting the system's operations and stability.
Dai's creation and management depend on an overcollateralized loan system facilitated by MakerDAO's smart contracts. Users deposit Ethereum-based assets as collateral to borrow Dai, with a requirement to maintain a collateralization ratio of at least 150%. This ensures that every Dai is backed by assets exceeding its value, supporting its stability. The system allows for the minting and burning of Dai, based on collateral fluctuations and loan repayments.
Dai can be used in various applications within the fintech and blockchain ecosystems, including:
Dai was initiated by MakerDAO, founded by Rune Christensen in 2014, with the explicit aim of creating a stable, decentralized currency on Ethereum. Its initial introduction in December 2017 presented it as the first decentralized stablecoin, quickly adopted in the burgeoning DeFi ecosystem. Over time, Dai evolved to support multi-collateralization beyond Ethereum, enhancing its adaptability and utility. Recent strategic shifts include the development of new projects like PureDai to bolster decentralization and stability.#