Dai is a decentralized cryptocurrency stabilized against the value of the US dollar. The collateralized assets backing Dai are other cryptocurrencies instead of fiat and are held within smart contracts rather than in institutions.
Calculate how much you can earn by staking Dai. Results vary based on the staking amount, term, and type selected.
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- What type of Stablecoin is DAI?
- How does it work?
- How is DAI Minted?
DAI is a Crypto-backed stablecoin.
Instead of using dollars or another currency as reserves, we have cryptocurrencies acting as collateral. As the crypto market is highly volatile, crypto-backed stablecoins usually over-collateralize the reserves as a measure against price swings.
Let’s look at an example. To mint $100 of a DAI pegged to USD, you will need to provide $150 of crypto working at 1.5x collateral. Once you have your DAI, you can use it how you want. You could transfer it, invest with it, or simply keep it. If you want your collateral back, you’ll need to pay back the 100 DAI. However, if your collateral drops below a certain collateral ratio or the loan’s value, it will be liquidated.
DAI is created whenever someone takes out a loan on MakerDAO. DAI is destroyed when loans are paid back.