What is makerdao (Dai) & how does it work?

Individuals can both borrow and lend funds in the form of DAI using MakerDAO, and the platform is fully decentralized. MakerDAO currently stands as one of the most popular DeFi projects in the crypto industry, along with other big players like Uniswap and Yearn Finance.

What is dai (dai)?

DAI is an ERC-20 token that was built specifically to run on the Ethereum blockchain. ERC stands for "Ethereum Request for Comment," which is the standard developed in 2015 that creates and enables smart contracts on the Ethereum network. DAI can be purchased outright on either centralized cryptocurrency exchanges or DEXs.

What is a Dai token?

As illustrated in the whitepaper, the Dai token, like traditional currencies, has certain benefits: since the token aims to have a stable value, for example, 1 Dai = $1, it can be used for exchange and can be used to settle debts and deferred payments. Therefore, it can be said that Dai has functionality similar to a traditional currency.

How is Dai different from other stablecoins?

DAI is a stablecoin, and created in the MakerDAO protocol. DAI differs a little from other stablecoins, however. Let’s examine how exactly it is different from competing stablecoins. Stablecoins are cryptocurrencies tied to a fiat currency, often the U.S. Dollar. Tether (USDT) is one such example of a stablecoin, which is linked to the dollar.