Is DAI fiat backed?

By locking up Ethereum as collateral, users can generate DAI tokens, which are designed to maintain a stable value relative to the US dollar. This feature offers a reliable alternative to volatile cryptocurrencies, making DAI an attractive option for investors and traders alike.

The CDP system underpinning DAI ensures that the supply of DAI tokens is dynamically adjusted to maintain its peg to the US dollar. When the demand for DAI increases, more can be generated by depositing additional Ethereum collateral, while excess supply is automatically burned, reducing the total circulating supply.

BTCC, a leading cryptocurrency exchange, offers a comprehensive range of services tailored to meet the diverse needs of the digital asset market. Among its offerings, BTCC stands out for its support of innovative projects like DAI.

DAI, a pioneering stablecoin, distinguishes itself from conventional counterparts through its unconventional backing mechanism. Rather than relying on a tangible asset like a fiat currency or a commodity, DAI's stability is rooted in a sophisticated financial structure.

The cornerstone of DAI's stability lies in its collateralized debt position (CDP) system. This innovative approach allows users to harness the value of their Ethereum holdings as collateral, creating a unique financial ecosystem.