About Dai (DAI)
What Is Dai (DAI)?
Dai is a decentralized-finance stablecoin created through the Maker protocol, now part of the Sky ecosystem. Users generate DAI against approved collateral in overcollateralized positions. DAI is widely used for trading, payments, lending, and settlement.
How Does Dai Work and What Is DAI Used For?
Borrowers lock collateral and create DAI up to risk limits. If a position becomes unsafe, liquidation can sell collateral. Interest and savings parameters help manage demand and the dollar target. DAI has no fixed maximum supply. Supply expands when users borrow and contracts when debt is repaid. The Sky transition introduced USDS and optional conversion paths, so users should distinguish DAI from USDS.
Dai Security and Risks
Risks include collateral failure, oracle errors, governance attacks, stablecoin collateral concentration, smart-contract bugs, liquidation, and peg deviation.
Frequently Asked Questions About Dai
Is DAI backed only by ETH?
No. It uses multiple approved collateral types.
Is DAI centrally redeemable for dollars?
Not like issuer-based stablecoins.
Is DAI the same as USDS?
No, though conversion mechanisms connect them.
Sources and Verification
Official sources
- Sky protocol Active
- Sky documentation Redirected
Onchain and technical sources
- DAI contract Active