The original decentralized over-collateralized stablecoin, soft-pegged to the US dollar and issued by the MakerDAO protocol.
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Dai (DAI) is a US dollar-pegged stablecoin issued by MakerDAO, distinct from USDT and USDC because it is decentralized and backed by on-chain collateral rather than off-chain reserves. DAI was the first widely-used decentralized stablecoin and remains an important alternative for users who want exposure to a dollar-pegged asset without trusting a centralized issuer. The token is being gradually rebranded to USDS as part of the MakerDAO Endgame plan, though DAI continues to circulate alongside USDS.
DAI is minted when users open Vaults in MakerDAO and deposit collateral (ETH, wstETH, USDC, real-world asset tokens, and more). The minted DAI must be over-collateralized (typically 130-150% minimum). When users repay their DAI debt, the underlying collateral is returned. The peg holds via two mechanisms: arbitrage (when DAI trades above $1, more people open Vaults to mint and sell DAI) and the Peg Stability Module (an automated swap with USDC at 1:1 to absorb peg deviations).
DAI is widely used in DeFi as a stable unit of account, particularly in lending protocols and DEX pairs. It is favored by users who avoid centralized stablecoin exposure (USDC, USDT) for ideological or regulatory reasons. DAI is also the unit of denomination for many DeFi yield strategies, futures contracts, and prediction markets.
DAI's peg has held remarkably well but did briefly trade below $0.95 during the March 2020 ETH crash and the March 2023 USDC SVB scare. Over-collateralization makes DAI capital-inefficient compared to USDC. The increasing use of USDC and US Treasuries as backing collateral makes DAI less "decentralized" than the original ETH-backed design.
See stablecoin for the broader category and the stablecoin-flows endpoint for issuance data.