Dai is a decentralized, crypto-collateralized stablecoin that built on Ethereum and aims to maintain a stable value relative to the U.S. dollar. The asset is pegged 1:1 to dollars via what is known as the Maker (MKR) Dai Stablecoin System. The Collateralized Debt Position (CDP) is a financial cryptocurrency concept that has been in development since 2014 by the MakerDAO project, which offers a possible solution to the high volatility that cryptocurrency faces today through the stablecoin known as Dai. With a CDP, a user deposits an asset into a smart contract as collateral for a loan. Once the CDP holds the assets deposited by a user, the user can then generate the equivalent USD value in Dai that they wish to borrow. Users can then do anything they want with Dai, just like any other cryptocurrency. One of the main uses for DAI is as a stable hedge or counterweight against the volatility of more popular crypto-assets such as Ethereum or Bitcoin. The stable value of DAI means it is good for investors or traders who believe the market is about to go down.
Original author – Rune Christensen
Initial release – 9 October 2019
Development status – Active
Website – makerdao.com/en/