What is DAI (DAI)?

DAI stands out as the pioneering decentralized stable cryptocurrency, backed by collateral. Functioning as an ERC-20 token, DAI's objective is to maintain a steadfast 1:1 value with the U.S. dollar through the utilization of smart contracts that secure other crypto assets.

What sets DAI apart from conventional stablecoins is its distinction as the native token within the Maker Protocol. This protocol operates as a decentralized autonomous ecosystem of smart contracts, seamlessly executing on the Ethereum blockchain.

The concept of collateralized loans is integral, offering lenders the means to secure loans by immobilizing their owned assets. Notably, such loans generally incur lower interest rates in comparison to unsecured alternatives, owing to the capacity to liquidate the locked assets to partially satisfy the loan obligation.

Founded in 2014 by developer Rune Christensen, the Maker Foundation laid the groundwork for DAI's inception.

The Maker Protocol emerged as an open-source initiative, positioned as a decentralized alternative to the contentious centralized stablecoin protocols prevalent during its inception.

In 2017, DAI made its official debut on the Maker Protocol. Crafted to serve as a reliable, stable, and secure lending asset for both businesses and individuals, DAI achieves these objectives without compromising decentralization.

Post the successful initiation of the Maker Protocol, the Maker Foundation ceded all control over the platform to MakerDAO. Now operating as a decentralized autonomous organization, MakerDAO assumes governance over the entire Maker Protocol.

How Does DAI work and What makes it Unique?

DAI plays a pivotal role within the framework of Collateralized Debt Positions, commonly known as CDPs.

These CDPs are smart contracts within the Maker Protocol, enabling users to secure their collateral assets (ETH, BAT, etc.) and generate DAI.

Think of CDPs as secure vaults where users lock their collateral, gaining access to liquid, stable crypto-cash. To mitigate the volatility of the collateralized assets, DAI is often over-collateralized to prevent liquidation.

For instance, a user might deposit $200 worth of ETH to unlock $100 DAI, creating a buffer against market fluctuations. In the event of a 25% drop in ETH price, the $100 DAI loan remains secure, covered by $150 worth of ETH.

Reclaiming collateralized assets involves returning the loaned DAI along with an additional fee.

DAI represents a new wave of cryptocurrencies — stablecoins. The strength of stablecoins lies in their capacity to provide a steady store of value amid market volatility. Notably, the Maker Protocol operates DAI in a fully decentralized manner, entrusting protocol governance to a distributed network of users forming the MakerDAO.

To ensure the efficacy of its autonomous processes, the Maker Protocol relies on real-time information continuously fed into the system, guaranteeing proper collateralization within the automated CDPs.

What are the Advantages of DAI Stablecoin?

• No Account Minimum: In various parts of the world, numerous individuals lack the minimum assets required to qualify for opening a bank account. The distinctive advantage of using DAI is that there is no stipulated minimum balance necessary, making it accessible to individuals regardless of their asset quantity.
  
  
• Stable Value: DAI serves as a viable option for a stable currency, offering a potential avenue for financial inclusion for residents in regions grappling with pronounced economic instability.
  
  
• Decentralized Freedom: DAI, operating as a transparent and permissionless system, plays a crucial role in providing users with unrestricted access to their wealth. In contrast, certain governments, exemplified by those in Zimbabwe and Myanmar, have been recognized for imposing restrictions on citizens' access to fiat, often instituting daily or monthly withdrawal limits on their bank accounts.
  
  
• Fast and Cost-Effective: International wire transfer fees can be exorbitant, and the time required to complete a transfer can be excessively prolonged in numerous instances. DAI, with its minimal transfer fees and swift processing times, facilitates transparent and efficient global transactions from one user's wallet to another.
  
  
• Highly Secure: The MakerDAO system prioritizes security, conducting thorough audits and research to fortify the platform's robustness. Employing mathematical analysis, developers formally verify all smart contracts and underlying protocol mechanisms that compose the internal structure of the system, contributing to its heightened security measures.

How to Buy Cryptocurrency DAI?

Acquiring DAI through the fastest and most convenient means involves engaging with a Cryptocurrency Exchange. Given the multitude of exchanges available, selecting the right one is crucial, considering various factors common to all platforms. Ideally, purchasing cryptocurrency should be swift, beginner-friendly, and entail low fees. In this regard, the recommended choice is Cryptal, the pioneering Georgian Cryptocurrency exchange.

At Cryptal, obtaining DAI is streamlined through two accessible methods: Convert and Spot Exchange

• Convert: When time is of the essence, Cryptal's Convert function comes to the rescue. In a swiftly changing market, obtaining your tokens promptly is often crucial.
  
  The Convert function enables the immediate exchange of DAI into various fiat assets, ensuring swift execution without the need for any prior experience. This feature caters to individuals seeking rapid transactions and those who are just embarking on their journey into the world of cryptocurrency.
  
  
  
  
  
  
• Spot Exchange: Functioning as a marketplace, the Spot Exchange connects you with fellow traders interested in buying or selling crypto, specifically DAI. Here, you initiate a bid and await approval for your Buy Order.
  
  It's important to note that the Spot Exchange offers the advantage of securing the best price, making it particularly suitable for more experienced traders who are comfortable navigating the intricacies of the trading environment.

So, what is DAI to sum up?

DAI, a decentralized stable cryptocurrency, operates on the Maker Protocol, utilizing Collateralized Debt Positions (CDPs) for users to lock assets and generate DAI.

Launched in 2017, DAI, governed by MakerDAO, provides stable, secure lending. Beyond account minimums, DAI's inclusivity appeals to regions with economic instability.

Cryptal exchange offers convenient DAI acquisition, with the Convert function enabling instant exchanges and the Spot Exchange catering to experienced traders. DAI's global transactions, minimal fees, and decentralized governance exemplify its significance in the cryptocurrency landscape.