Summary:

• What is the Dai Platform and how does it work?
• Advantages of the Dai exchange.
• Dai’s past, present and future price positions.
• Stablecoins

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The Dai (DAI) platform

Dai is a stablecoin that is based on the Ethereum (ETC) blockchain, whose development and issuance is managed by the makerDAO decentralised autonomous organisation and the maker protocol. DAI’s price is soft-pegged to the US Dollar and is collateralised by a mixture of different cryptocurrencies all of which are deposited into smart-contract vaults everytime that new DAI are minted.

DAI’s are differentiated into two categories, the first being Multi-collateral DAI and single-Collateral DAI (SAI), SAI is the earlier version of DAI that was only able to be collateralised by a single cryptocurrency. In addition, SAI does not support the DAI savings rate, which is the means by which DAI holders are able to earn savings through their DAI holdings.

DAI is unique mainly due to the fact that it is soft-pegged to the US Dollar. The crypto market is well known for its volatility, with even the largest, highly-liquid coins, such as Bitcoin (BTC) sometimes experiencing price changes up and down within one day. Due to the volatility, investors normally add safe-haven assets to their portfolio, whose stable price may offset market risk.

One of these safe-haven assets is DAI. A stable crypto asset is one whose value is pegged to assets with relatively stable value. DAI is also managed by a decentralised autonomous via a software protocol. Therefore, all issuance and burning of tokens are managed and publicly recorded by Ethereum-powered self-enforcing smart-contracts, which makes the entire system more transparent and less prone to corruption.

The current market capitalisation of DAI is more than $6.75 billion. There is a maximum supply of 6.751 billion DAI with 6.75 billion currently in circulation.

Advantages of holding DAI

1. Passive income: thanks to DAI’s unique interest-generating program, DAI Savings Rate (DSR), users are able to put idle DAI tokens to work by producing a variable interest income through a lockup period. In addition to DSR, users are also able to earn a passive income through depositing their DAI tokens directly into a MakerDAO smart-contract. The smart-contract is programmed to automatically add interest to the account.
2. Decentralised freedom: DAI users benefit through having unrestricted access to their funds, thanks to the decentralised nature of DAI. Thanks to its permissionless and transparent system, there are no credit checks, intermediaries or approvals needed to use the DAI platform.
3. Very secure: DAI’s platform does routine audits, DAI’s integrated wallet, two-factor authentication and other security measures all boost the security of the DAI platform. In addition the MakerDAO developers verify all smart-contracts on the blockchain to ensure both network viability and liquidity. DAI also runs on the Ethereum blockchain, which aids in keeping DAI secure.
4. Price Stability: due to its peg to the US Dollar, the price of DAI has remained stable.

Past, present and future prices of DAI (DAI)

After the launch of the DAI network, the price of DAI took a while to rise after being launched, the first spike in price that occurred during the first quarter of 2020, and saw the price go above $1.85, and was followed by a sharp decline. After its first peak in 2020 the price fell and then spiked again in the same year, and continued to experience volatility until the end of 2020. Thereafter the price of DAI has remained relatively stable, this is due to its peg to the US Dollar. The value of DAI has remained stable despite the current market conditions and risk-off sentiment.

Over the past few months, the markets have been facing strong investor risk-off sentiment in the wake of the geopolitical tensions, Covid-19 lockdowns in China and supply chain issues. The cryptocurrency market has followed the trends of the greater market during these times, therefore the price of most cryptocurrencies have been falling, DAI does not fall under this category.

According to some analysts the future price of DAI (DAI) could reach up to $1.26 by 2024 and could see a price of more than $1.27 by 2026. However, it is important to remember that this future price prediction is based solely on data and does not take into account factors such as investor sentiment and the ever changing market conditions, both of which make it difficult to make accurate future price predictions.

DAI Price Chart

Sources: coinmarketcap.com, fool.com, cryptoperdictions.com