Dai price

FAQ About DAI

• What is DAI?

  DAI is a decentralized, collateral-backed stablecoin issued by the MakerDAO protocol. Unlike centralized stablecoins (like USDC), DAI is backed by over-collateralized crypto assets on-chain, not by dollars in a bank account.

• How does DAI maintain its 1:1 peg with the US Dollar?

  DAI maintains a soft peg to $1, primarily through incentive-based arbitrage. When DAI deviates from its peg, arbitragers restore balance using the Maker protocol’s minting and burning mechanisms, such as depositing collateral or repaying debt.

• How is DAI minted?

  Users mint DAI by over-collateralizing assets such as Ethereum (ETH) or other approved cryptocurrencies in Maker Vaults. The collateral’s value must always exceed the value of the DAI minted.

• How does DAI's Liquidation mechanism work?

  If the collateral value in a Vault falls below the minimum liquidation ratio relative to the DAI debt, the Vault is liquidated. Liquidators (Keepers) auction the collateral to repay the DAI debt, ensuring the system remains fully collateralized.

• What is the core advantage of DAI?

  DAI’s main advantage is its decentralization and transparency. All collateral and issuance records are publicly visible on the blockchain, without reliance on any single centralized entity or traditional financial institution.

• What are the main DeFi use cases for DAI?

  DAI is a key stablecoin in the decentralized finance (DeFi) space. It is widely used as a trading pair, as collateral or a lending asset in protocols like Aave and Compound, and as a base asset for liquidity mining.

• Is DAI a single-collateral or multi-collateral stablecoin?

  Since its November 2019 upgrade, DAI has been a Multi-Collateral Dai (MCD) stablecoin, accepting multiple crypto assets as collateral to increase its stability.

• What role do Real-World Assets (RWA) play in DAI collateral?

  MakerDAO is gradually adding Real-World Assets (RWAs), such as T-bills and real estate mortgages, to its collateral mix to increase DAI's diversity and connect decentralized finance (DeFi) with traditional finance.

• What is the total supply of DAI?

  DAI has no fixed supply; issuance depends on collateral deposited by users. Circulating supply exceeds 5 billion.