How safe is DAI stablecoin?

If market participants were to sell DAI for less than a dollar, it would create an arbitrage opportunity for debtors. By redeeming their collateral at a discounted rate, they could profit from the price discrepancy, thus incentivizing the maintenance of DAI's peg.

DAI stands as one of the safest stablecoins in the cryptocurrency market.

Its creation is intricately tied to a debt mechanism that involves an over-collateralization process. This ensures that every DAI minted is backed by sufficient collateral, providing a robust foundation for its stability.

When the debt associated with the DAI is repaid, the corresponding amount of DAI is burned, effectively removing it from circulation. This process maintains a balanced supply and demand dynamic.

The stability of DAI is further reinforced by its peg to the US dollar. This peg is not arbitrary but rather a direct consequence of its underlying economic mechanics.