Dai is a stablecoin that aims to always keep its value at about $1. Dai tokens are native to the Maker Protocol, which is one of the largest decentralized applications (or Dapps) available on the Ethereum blockchain. To understand how Dai works, it helps to first know about the Maker Protocol, the platform that generates the stablecoin and is part of a larger crypto ecosystem:
The Maker Protocol is maintained by MakerDAO (pronounced “maker dow”), a peer-to-peer organization for crypto borrowing and lending.
MakerDAO is a decentralized autonomous organization, or DAO, meaning that it’s controlled by the votes of its members, not by a central authority; specifically, it’s governed by those who own MKR tokens, another token native to the Maker Protocol.
Dai is backed by crypto assets that MKR holders have agreed to accept as collateral. Some stablecoins are backed by fiat currency instead, that is, government-backed currency such as the U.S. dollar.
You can purchase Dai using…
This article was written by Connor Emmert and originally published on www.nerdwallet.com