DAI is a cryptocurrency with a tight binding to fiat money (or to another conventional assets). The DAI cryptocurrency is a stable currency. Its goal is to solve the problem ofava volatility of cryptocurrency.
DAI is a stablecoin tied to a fiat currency – the dollar. This is an internal token of the MakerDAO platform. This platform has another internal cryptocurrency-MKR. However, within the platform, they have different purposes and goals. The stability of the DAI is provided not only by a tight peg to the dollar. The coin is a deposit.
DAI is based on the Ethereum platform, which makes it possible for absolutely anybody to get access to all information related to the DAI platform. DAI tokens cannot be mined using mining, so the number of coins is regulated by the creators of the cryptocurrency. DAI coins are free for creation and redemption directly by users of the platform. To create a DAI, it is necessary to have a collateral position at a special address of a smart contract (currently, only ETH can act as bail, but in the near future it is planned to expand the number of currencies that can act as bail). Thus, the user creates a DAI token for himself. The main function of DAI is to create stable digital money. Thus, the coin can be used as a tool for reliable storage of funds and for user calculations. Stability goes beyond pegging to the dollar. The base is working on CDPs technology and smart contracts. This text is from project cryptodefix.com. It costs the ETH card and create a collateral position. Having issued a large one, a person can click like any currency. CDPs and MKR are used for the full operation of the DAI cryptocurrency.
The price of the currency is stable on the platform using the CDPs system. CDPs storage assets were sent to users. Who can participate in the creation of the university. This process is controlled by an internal smart contract.
MKR card from the island platform manufacturer to organize the management and operation of the system repair cost base stable and acts as a tool to attract investment. From a practical point of view, the process occurs in this way:
- You need to open a transaction in order to create a CDP and then apply for financing.
- Next, you need to open a transaction to receive tokens, which can currently be purchased exclusively for ETH
- The user is automatically charged a debt in cryptocurrency, after which the amount of DAI tokens equivalent to the accrued debt is issued.
- If the user wants to return the funds back, he needs to redeem the deposit and then the received tokens will burn.
Among the strengths, there are:
- DAI tokens are liquidated and created by the system users themselves thanks to a certain algorithm.
- DAI reliability. For example, True USD and Tether stablecoins are backed by assets in bank accounts. This causes users to have concerns about whether the coins are really backed up to fiat. In the case of DAI, there can be no doubt, so that the token is issued and exists only on the ETH blockchain, it is open and decentralized. Compared to its competitors, DAI, due to the principle of bail with ETH, gives users confidence that it is attached to real assets and they are available for exchange.
- The coin is traded on a large number of exchanges.