While there are many different types of cryptocurrency, some people say that you can really boil it down to two broad categories: stablecoins, and everything else. However, Dai is going against the grain, offering a stablecoin that looks much more like a traditional cryptocurrency than a regular stablecoin.
This week, we’re thrilled to add Dai (DAI) to our growing cryptocurrency Marketplace. By offering our users access to more stablecoins, we hope to give them alternative routes to move money in and out of exchanges in a way that’s convenient to them. Keep reading to get a refresher on stablecoins, learn why we were interested in Dai, and discover how Dai fits into our broader vision for Metal Pay.
What is DAI?
As we mentioned above, Dai is a stablecoin unlike any other. While most stablecoins maintain their value as a constant by using real-world fiat money and fiat-alternatives to act as price anchors, Dai remains strictly decentralized and cryptocurrency focused. Rather than basing its value off of physical assets (like gold), or fiat money (like US Dollars), Dai derives its value from other cryptocurrencies – Ethereum (ETH), USDC, BAT and WBTC.
How does DAI work?
First, it’s helpful to understand how stablecoins work. Traditionally, stablecoins maintain a constant value via a centralized authority that tightly ensures the production of a stablecoin is closely matched by physical assets. This provides a predictability to the market and avoids price variations – offering a perceived “safe haven” for people who are wanting to move money from one cryptocurrency into a stable environment, but aren’t quite ready to cash out into fiat money again.
Dai approaches this a little differently. Rather than people controlling the production of this cryptocurrency, Dai is controlled by a series of smart contracts. A smart contract is about how it sounds – a predictable, knowable contract that has code written to automate actions based on other actions and events.
Decentralized, Accessible, and Predictable
Additionally, Dai approaches the idea of collaterals in a unique way. While most stablecoins need to regularly publish updates proving that they have adequate collaterals to give their coin its assumed value, Dai accomplishes this by making all collaterals constantly and easily accessible via the Ethereum blockchain. With Dai, you don’t have to depend on anyone to honestly and ethically provide financial disclosures – all of that information is readily available to the entire world on a publicly accessible blockchain.
Who uses DAI?
Much like other stablecoins, Dai is used by anyone looking to move funds from one cryptocurrency into another. Stablecoins offer a relatively safe way to take a break from cryptocurrency trading without risking your money losing value. For instance, let’s say someone bought Proton (XPR) at a low price, held it for a few months until the price rose to a certain point, and then decided to sell. By selling XPR for DAI, they now have their profits parked in a relatively stable environment while they decide what to do next – buy back into XPR, buy something else, or cash out into fiat money. By using Dai, traders can know that their stablecoin remains decentralized and monitorable at all times.
Additionally, Dai offers people a way to save money, spend cryptocurrency, or leverage what they already own. Dai also works widely across the decentralized finance (DeFi) ecosystem and within blockchain-based games. Whether you’re someone looking for a stablecoin to hold your money in, or you want something that is versatile and useful, Dai was designed to meet your needs.
Metal Pay and DAI
We were impressed with the novel solutions the team behind Dai came up with for creating a decentralized stablecoin. Building a stablecoin is always a challenge, and keeping one decentralized is no easy feat – managing to pull off both at the same time definitely caught our attention. By offering Dai to our users, we’re giving them another way to move fiat money into and out of cryptocurrency in a way that feels comfortable and stress-free.
We’re thrilled to add Dai to our growing Marketplace, and we think that you’ll love it, too. New to Metal Pay? Download us from the Apple App Store or the Google Play Store. Still have questions about what Dai is or how it works? Be on the lookout for more content about Dai in the Discover section of the Metal Pay app, as well as on our social media accounts: Twitter | Instagram | Facebook.
🤘 Your friends at Metal 🤘
