DAI is a decentralized stablecoin that aims to maintain a value pegged to the US dollar (1 DAI ≈ 1 USD). It is built on the Ethereum blockchain and is managed by the MakerDAO protocol.
Here are the key features of DAI:
Stable Value: Unlike volatile cryptocurrencies like Ethereum or Bitcoin, DAI is designed to be stable and is commonly used for saving, lending, and transactions.
Decentralized: DAI is not issued by a central authority; it's generated through a system of smart contracts on the MakerDAO platform.
Collateral-Backed: To generate DAI, users deposit crypto assets (like ETH) as collateral. If the value of the collateral drops too much, it can be liquidated to maintain DAI’s peg to the dollar.
Use Cases: DAI is used in decentralized finance (DeFi) applications, cross-border payments, remittances, and as a hedge against volatility.