DAI

DAI is the world’s first major decentralized stablecoin, pegged 1:1 to the U.S. dollar. Unlike centralized stablecoins such as USDC or USDT, DAI is created and managed by the MakerDAO protocol, making it trustless and censorship-resistant.

What is DAI?

DAI is a stablecoin that maintains its dollar peg using collateralized debt positions (CDPs) on the Ethereum blockchain.
It’s one of the most widely used decentralized stablecoins in DeFi (Decentralized Finance).

Launch year: 2017
Issuer: MakerDAO (decentralized governance)
Peg: 1 DAI ≈ 1 USD
Blockchain: Ethereum (ERC-20 token)

How Does DAI Work?

Collateral deposits: users lock up crypto assets (ETH, USDC, etc.) in MakerDAO smart contracts.
DAI minting: in return, they generate DAI tokens against their collateral.
Stability fee: interest is paid when collateral is unlocked.
Peg stability: if collateral value falls too much, it can be liquidated to keep DAI stable.
Governance: MKR token holders vote on system parameters like collateral types and risk levels.

Why is DAI Important?

Decentralization: not controlled by any single company or government.
DeFi backbone: widely integrated across lending, trading, and yield farming.
Transparency: fully transparent on-chain collateral system.
Resilient peg: survived multiple market crashes while maintaining stability.

DAI Use Cases

DeFi protocols: lending, borrowing, and liquidity pools.
Payments: stable dollar-denominated transfers on Ethereum and Layer-2s.
Savings: users can earn yield by depositing DAI into DeFi vaults.
Hedging volatility: keep value stable while staying in the crypto ecosystem.

Risks of DAI

Over-collateralization: requires locking up more than $1 of crypto to mint $1 DAI.
Reliance on USDC: part of its collateral includes centralized stablecoins.
Complexity: harder to understand for beginners compared to USDC/USDT.
Regulatory pressure: DeFi protocols face increasing scrutiny.

Lanzo Tip 🪙

DAI is the go-to decentralized stablecoin. If you care about staying fully on-chain and minimizing censorship risk, DAI is a strong choice — but always remember it’s more complex than centralized options.

DAI