DAI is a stablecoin that is issued by the MakeDAO protocol on the Ethereum blockchain. It is generated by depositing collateral for a loan in DAI. Users must over-collateralize their loan, except when depositing real-world assets.

DAI is mostly safe. However, users should remain aware of the risks associated with using DAI. In particular the collateral that backs the DAI stablecoin.

Decentralized finance (DeFi) is generally accepted to be the applications, products and services on the blockchain that mirror the traditional finance industry. Some of these include: insurance, borrowing and lending, trading, etc. The goal of DeFi is to provide financial services that are decentralized, open, and accessible to anyone with an internet connection, without the need for traditional financial intermediaries like banks.

What is a stablecoin?

A stablecoin is a type of cryptocurrency that is pegged to a specific asset or group of assets, such as a currency, commodity, or basket of assets. The goal of a stablecoin is to provide the benefits of a cryptocurrency, such as fast transaction times and low fees, while maintaining price stability. Stablecoins have become an important part of the DeFi ecosystem because they allow users to hold a stable value in a decentralized manner.

A DAO, or Decentralized Autonomous Organization, is a type of organization that is run using smart contracts on a blockchain. A DAO is designed to be decentralized, meaning that it is not controlled by a single individual or entity, but rather operates according to a set of rules encoded into its smart contracts.

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Max Moeller

Max is a cryptocurrency journalist with an affinity for games and emerging technology. After leaving school to start a writing career, he wrote his first article on blockchain and fell down the rabbit hole. Since starting in 2017, Max has worked with multiple blockchain startups and crypto enthusiast spaces, doing his best to educate the world on the nascent technology. Max has been published in various blockchain and crypto related magazines before settling down at BeInCrypto to focus on long-form content.