Dai PriceDAI

The Birth of Dai

Dai is a decentralized, crypto-collateralized stablecoin soft-pegged to the US dollar, issued by MakerDAO, an Ethereum-based protocol. It is primarily used as a means of lending and borrowing crypto assets without intermediaries, creating an unlicensed system with transparency and minimal restrictions.

MakerDAO was formed in 2014 by Danish entrepreneur Rune Christensen, and the Maker agreement, the infrastructure of the Dai stablecoin, was launched in December 2017. According to Christensen, the name of the cryptocurrency is based on the Chinese character dai, which he translated as "to lend or to provide capital for a loan". MakerDAO's Dai model differs from other leading stablecoins. First, Dai has an unprecedented degree of decentralisation. Although stablecoins such as Tether (USDT) provide a cryptocurrency backed by a reserve of fiat assets managed by a central organisation, no single entity controls the issuance of Dai. Instead, users who wish to hold Dai submit Ethereum-based assets to a smart contract that uses these assets as collateral to maintain Dai's peg to the dollar.

Secondly, unlike most stablecoins that use a single fiat currency or cryptocurrency as collateral, Dai can utilise various cryptocurrencies as collateral: Ethereum (ETH), Basic Attention Token (BAT), USD Coin (USDC), Wrapped Bitcoin (WBTC), Compound (COMP), and others. At its inception, the Maker protocol only supported Ethereum as collateral. However, in November 2019, the technology was upgraded to include BAT and USDC, creating today's multi-collateral Dai system. The current iteration of DAI was created in December 2019, replacing the earlier Single-Collateral Dai (SAI), which could only be collateralized by a single cryptocurrency and did not support the DAI Savings Rate. The increase in the number of collateralised assets reduces risk for users and enhances Dai's price stability. New collateral options will continue to be added through MakerDAO community votes.

Third, Dai token holders can earn interest on their Dai. Holders can earn on DAI through the DAI Savings Rate (DSR) and its wrapped token sDAI — a variable rate set by Sky governance. Those who hold MKR (MakerDAO's native governance token) set the Dai Savings Rate (DSR) and act as guarantors of Dai, meaning their MKR tokens can be liquidated if the system crashes. This structure incentivises guarantors to ensure the smooth operation of the Dai system and its collateralised tokens.

In September 2018, venture capital firm Andreessen Horowitz invested $15 million in MakerDAO by purchasing 6% of all MKR tokens. In 2019, MakerDAO experienced an internal struggle over whether to integrate more with the traditional financial system; Christensen wanted greater regulatory compliance to allow non-crypto assets as collateral, and the struggle led to the departure of MakerDAO's CTO. In August 2024, MakerDAO was rebranded as Sky, and the governance token changed from MKR to SKY. In 2024, Sky introduced a successor stablecoin, USDS, that runs on the same system and converts with DAI 1:1 with no fee. DAI remains fully active, though several centralized exchanges have moved balances to USDS. DAI is maintained by Sky — the protocol formerly known as MakerDAO — through community governance, where holders of the SKY token (formerly MKR) vote on accepted collateral, rates, and other parameters.

Contract address (Ethereum): 0x6b175474e89094c44da98b954eedeac495271d0f. Initial release: December 18, 2017. Written in: Solidity. License: AGPL v3.0. Total supply: 4.56B DAI. Circulating supply: 4.56B DAI. Max supply: ∞.

How Does Dai Token Work

Dai is an ERC-20 token that can be purchased from centralised and decentralised exchanges (DEXs). Additionally, you can create and borrow Dai by opening a Maker collateral vault through MakerDAO's Oasis mirror dashboard and depositing Ethereum-based assets as collateral. The Maker collateral vault, previously known as Collateralised Debt Positions (CDPs) in the early versions of the Maker agreement, is a smart contract that holds the collateral until the borrowed Dai is repaid.

The value of the collateral you deposit must always exceed the value of the Dai you issue. Each loan type has a fixed minimum collateralization ratio, usually 110–200%; if the ratio falls below that minimum, anyone may trigger liquidation of part of the collateral. For example, users must lock up $200 in ETH in order to receive $100 DAI, which is meant to account for the potential decrease in the value ETH. Dai is one of the most comprehensive digital assets in the blockchain ecosystem. Once borrowed, it can be used for decentralised finance (DeFi) applications or blockchain-based games, as well as other use cases.

Stability Advantages and Security Features for Dai Holders

Dai is soft-pegged to the US dollar, targeting a value close to $1.00. In March 2020, amid COVID-19 market volatility, DAI experienced a deflationary deleveraging spiral that at its peak pushed it to $1.11 before returning to $1.00. The enhanced price stability offered by the Dai stablecoin encourages investors to view Dai not only as a stable long-term store of value but also as a viable option for everyday transactions, significantly expanding the utility of blockchain technology and the entire cryptocurrency ecosystem.

By August 2024, MakerDAO had been used by Societe Generale and Huntington Valley Bank, and had invested in US Treasuries. According to a press release from the Sky Frontier Foundation, it estimated $611 million in gross revenue for 2025 from its ecosystem, with a $21 billion supply in USDS in early 2026.