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When was Dai issued? Learn about the origin of Dai in one article
DAI, a decentralized stablecoin launched in 2017 by MakerDAO, provides a stable alternative to fiat currencies with its value backed by a pool of collateral assets.
Oct 05, 2024 at 11:42 pm
1. Origins of Dai
The Dai currency project was launched in 2017 by MakerDAO, a decentralized autonomous organization (DAO) that manages the stablecoin DAI. DAI is a stablecoin that is pegged to the value of the US dollar.
2. The Purpose of Dai
DAI was created to provide a decentralized alternative to traditional fiat currencies. DAI is backed by a pool of collateral assets, such as Ether (ETH) and USDC. This pool of collateral ensures that the value of DAI is always stable, even during times of market volatility.
3. The Issuance of Dai
DAI is issued when a user deposits collateral assets into a MakerDAO vault. The value of the collateral must be greater than the amount of DAI issued. The user receives DAI in exchange for their collateral, which is held in the vault until the DAI is repaid.
Since it is an algorithmic stablecoin, DAI does not have a pre-defined issuance limit. The issuance and redemption of DAI are entirely governed by smart contracts on the Ethereum network. However, the amount of DAI in circulation is always backed by a corresponding amount of collateral, as determined by the stability fee and the collateralization ratio set by MakerDAO.
4. The Use of Dai
DAI can be used for a variety of purposes, including:
- For Making Payments: DAI can be used to make payments for goods and services. It can be sent from one person to another anywhere in the world.
- For Storing Value: DAI can be used as a store of value, similar to gold or other traditional currencies. DAI's value is stable, so it is not subject to the same price fluctuations as other cryptocurrencies.
- For Earning Interest: DAI holders can earn interest on their funds by lending out their DAI on decentralized lending platforms like Compound and Aave.
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