Dai (DAI) is a stablecoin whose value is always equivalent to one US dollar, but does not depend on a central authority or bank. Dai is a fully decentralized stablecoin, which runs on top of the Ethereum blockchain and is powered by the Maker protocol.
Dai offers a solution to the volatility problem often experienced by other crypto assets, which may hinder their adoption and use. In addition, Dai is also one of the important components in the decentralized finance (DeFi) ecosystem, which is a movement to create open, transparent, and inclusive financial services using blockchain technology.
How Does Dai (DAI) Work?
Dai is created by locking other digital assets, such as Ether (ETH) or ERC-20 tokens, into smart contracts called Vaults. A vault is a virtual vault that secures assets used as collateral for Dai. The amount of Dai that can be printed depends on the collateral value and the minimum guarantee ratio set by MakerDAO.
Additional information, MakerDAO is a decentralized autonomous organization (DAO) that governs Maker protocol parameters and policies through voting by Maker token holders (MKR).
Dai is designed to maintain stability in its value by adjusting incentive and punishment mechanisms that influence the behavior of Dai creators and users. For example, if the price of Dai in the market is higher than one dollar, then the creator of Dai will be encouraged to create more Dai and sell it in the market for profit. This will increase the supply of Dai and lower its price back to one dollar.
Conversely, if the price of Dai in the market is lower than one dollar, then Dai users will be motivated to buy more Dai and burn it or commonly called burning tokens. This is a mechanism for removing tokens from circulation to reduce their debt. This action will reduce the supply of Dai and increase its price back to one dollar.
What are the advantages of Dai (DAI)?
Dai has several advantages compared to other stablecoins, namely:
Decentralized
Dai is a decentralized stablecoin, which means that no party can control or manipulate its supply or value. Dai also does not rely on banks or other financial institutions to maintain reserves or guarantee their value. Dai relies solely on the Maker protocol which is based on code and community consensus.
Transparent
Dai is a transparent stablecoin, which means all transactions and activities related to Dai can be seen and verified by anyone on the Ethereum blockchain. Dai also has regular security audits and robust protection mechanisms to avoid risks such as hacker attacks, bugs, or human error.
Democratic
Dai is a democratic stablecoin, which means that all MKR token holders can participate in decision-making related to the Maker and Dai protocols. MKR token holders can vote to approve or reject parameter changes, addition or removal of collateral types, or emergency intervention necessary to maintain Dai's stability.
Dai Function (DAI)
Dai can be used as a stable and trustworthy medium of exchange, store of value, or accounting unit in various DeFi applications, such as lending, exchange, investment, insurance, and more. Dai can also provide an opportunity for anyone to earn passive interest by depositing it on a platform that offers Dai flowers, such as Oasis, Compound, or Aave.
Dai is a stablecoin that offers real utility and true investment opportunities. Dai is a decentralized, transparent, and democratic stablecoin. Dai is a stablecoin that contributes to the development of DeFi and a better financial future.
How to Buy Crypto on Bittime
You can buy and sell crypto assets in an easy and secure way through Bittime. Bittime is one of the best crypto applications in Indonesia that has been officially registered by Bappebti.
To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. In addition, also make sure that you have enough balance by depositing some funds into the wallet. For your information, the minimum asset purchase at Bittime is Rp10,000. After that, then you can make a crypto asset purchase in the application.
Monitor the price chart movements of Bitcoin (BTC), Ethereum (ETH), Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.
Also Read:
What Are Stablecoins and How Are They Different from Fiat?
DAI vs USDT: Who is More Attractive?
Circle CEO predicts regulation of stablecoins in the US
DISCLAIMER: This article is informational in nature and does not constitute an offer or solicitation to sell and buy any crypto asset. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices may change significantly from time to time and Bittime is not responsible for fluctuations in crypto asset exchange rates.
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