{"id":"dai","title":"DAI","content":"**DAI** is a [stablecoin](https://iq.wiki/wiki/stablecoin) issued by [MakerDAO](https://iq.wiki/wiki/makerdao), a protocol built on [Ethereum](https://iq.wiki/wiki/ethereum), that aims to maintain a one-to-one value with the US dollar. It enables the lending and borrowing of [cryptocurrency](https://iq.wiki/wiki/cryptocurrency) assets directly and without intermediaries. [\\[8\\]](#cite-id-r0fg6218dwp)\n\n$$widget0 [YOUTUBE@VID](BWqcw4lWoBM)$$\n\n## Overview\n\nUnlike stablecoins like [USDT](https://iq.wiki/wiki/tether) which are backed by a centralized organization managing [fiat assets](https://iq.wiki/wiki/fiat-money), DAI has no central controlling entity. [\\[9\\]](#cite-id-5hxjy7lnpz2)\n\n$$widget0 [YOUTUBE@VID](eCNfuhY50K8)$$\n\nTo obtain DAI, users can either buy the equivalent dollar amount of DAI using [ETH](https://iq.wiki/wiki/ether-eth) on an exchange or use the Maker Protocol to collateralize ETH and other assets to generate DAI. The issuance of DAI is facilitated by a [smart contract](https://iq.wiki/wiki/smart-contract) that accepts Ethereum-based assets as collateral, used to maintain its one-to-one value with the US dollar.\n\nThe founder of [MakerDAO](https://iq.wiki/wiki/makerdao), [Rune Christensen](https://iq.wiki/wiki/rune-christensen), outlined plans to introduce a new [stablecoin](https://iq.wiki/wiki/stablecoin) and [governance token](https://iq.wiki/wiki/governance-tokens) as part of an ongoing overhaul of the platform. This proposal was posted on Maker's governance forum in May 2023.\n\nThese new tokens will represent upgraded versions of Maker's existing [stablecoin](https://iq.wiki/wiki/stablecoin), DAI, and its [governance token](https://iq.wiki/wiki/governance-tokens), [MKR](https://iq.wiki/wiki/mkr). They are anticipated to be launched \"within several months,\" alongside the introduction of a new, unified brand and website for the protocol, as indicated in the proposal.\n\nIn addition to these token upgrades, Christensen has also proposed the incorporation of artificial intelligence into Maker's governance processes. [\\[13\\]](#cite-id-9dl6acizx0r) [\\[9\\]](#cite-id-5hxjy7lnpz2)\n\n### Collateralized Debt Positions\n\nDAI is a decentralized [stablecoin](https://iq.wiki/wiki/stablecoin) that maintains a one-to-one ratio with the U.S. dollar and uses various cryptocurrencies, including [ETH](https://iq.wiki/wiki/ethereum), BAT, [USDC](https://iq.wiki/wiki/usdc), [wBTC](https://iq.wiki/wiki/wrapped-bitcoin-wbtc), [COMP](https://iq.wiki/wiki/comp), and more, as collateral. The Maker Protocol, an Ethereum-based protocol, allows users to generate DAI by depositing collateral assets into Collateralized Debt Positions (CDPs), which act as secure storage. To mitigate the volatility of the [crypto](https://iq.wiki/wiki/cryptocurrency) collateral, DAI is often over-collateralized, requiring a deposit greater than the value of the generated DAI. To recover the deposited collateral, the user must return the DAI and pay a stability fee. The [MakerDAO](https://iq.wiki/wiki/makerdao) community votes on the addition of new collateral options. [\\[8\\]](#cite-id-r0fg6218dwp)[\\[9\\]](#cite-id-5hxjy7lnpz2)\n\n### DAI Savings Rate\n\nThe [MakerDAO](https://iq.wiki/wiki/makerdao) system was updated in November 2019, introducing the Dai Savings Rate, an interest rate paid on all Dai deposited in a specific [smart contract](https://iq.wiki/wiki/smart-contract) that is decided by a MakerDAO vote. DAI token holders receive interest on their DAI. The Dai Savings Rate is set by [MKR](https://iq.wiki/wiki/mkr) token holders, MakerDAO's native [governance token](https://iq.wiki/wiki/governance-tokens). These MKR holders act as guarantors for DAI and are incentivized to maintain the system's stability by the potential [liquidation](https://iq.wiki/wiki/liquidation) of their MKR in case of a system crash. [\\[10\\]](#cite-id-w3cdk9f3zqm)\n\n$$widget0 [YOUTUBE@VID](TVv9fun7dxI)$$\n\n### Maker Vaults\n\nMaker Vaults are [smart contracts](https://iq.wiki/wiki/smart-contract) that allow users to leverage accepted collateral assets and generate Dai in the Maker Protocol. Users can access the Maker Protocol and create Vaults through various user interfaces, including Oasis Borrow and interfaces developed by the community. Generating Dai through a vault creates an obligation to repay the borrowed amount along with a Stability Fee, in order to withdraw the locked collateral.\n\nIn order to maintain sufficient collateral in the Maker Protocol to cover the value of all outstanding debt, any Maker Vault that is deemed too risky based on the parameters set by Maker Governance is liquidated through automated Maker Protocol auctions. The determination is made by comparing the [Liquidation](https://iq.wiki/wiki/liquidation) Ratio to the current collateral-to-debt ratio of a Vault. Each type of Vault has its own Liquidation Ratio, which is established by [MKR](https://iq.wiki/wiki/mkr) voters and based on the risk profile of the specific collateral asset type.\n\nThrough its auction mechanisms, the Maker Protocol can liquidate Vaults even if price information for the collateral is not available. When a Vault is liquidated, the Maker Protocol takes the collateral and sells it using an internal market-based auction mechanism known as a Collateral Auction. The proceeds from the Collateral Auction are used to cover the outstanding obligations of the Vault, including the Liquidation Penalty fee determined by [MKR](https://iq.wiki/wiki/mkr) voters for the particular type of collateral used in the Vault. [\\[12\\]](#cite-id-6blz8vbddlf)\n\n## Dai Foundation\n\nThe Dai Foundation, located in Denmark, operates autonomously and is separate from the Maker Foundation. It was established to preserve the Maker community's intangible assets, such as trademarks and code copyrights, and adheres to strict and defined objectives outlined in its mandate. The Foundation's role, as stated in the Dai Foundation Trust Deed, is to protect the elements of the Maker Protocol that cannot be technologically decentralized. [\\[11\\]](#cite-id-agp2g2y43th)\n\n## MakerDAO to Sky\n\nIn May 2024, the [MakerDAO](https://iq.wiki/wiki/makerdao) ecosystem underwent a significant rebranding, announcing a transition from [Maker](https://iq.wiki/wiki/mkr) to [Sky](https://iq.wiki/wiki/sky), as part of a broader organizational and product restructuring. This rebrand was part of the final phase of the \"Endgame Plan,\" a long-term vision laid out by Maker's founder [Rune Christensen](https://iq.wiki/wiki/rune-christensen).\n\nThe change aims to create a more modular, scalable, and user-friendly [DeFi](https://iq.wiki/wiki/defi) framework. The core idea involves separating the protocol's foundational components into distinct units called SubDAOs, each with its own token and governance system. The overarching organization, formerly known as [MakerDAO](https://iq.wiki/wiki/makerdao), is now referred to as [Sky](https://iq.wiki/wiki/sky), representing a decentralized governance and infrastructure provider.\n\n### DAI Becomes USDS\n\nAs part of the rebranding, the long-standing DAI [stablecoin](https://iq.wiki/wiki/stablecoin) is being phased out and replaced by a new asset named [USDS](https://iq.wiki/wiki/usds) (United States Dollar Substable). USDS is intended to fulfill the same function as DAI but with a refreshed identity aligned with the new Sky ecosystem structure.\n\nThe transition began in May 2024, and USDS saw rapid adoption, surpassing $490 million in issuance within the first five days of its launch. While DAI will continue to exist for some time, its role is expected to diminish gradually as USDS becomes the default stablecoin within Sky’s ecosystem.\n\nThe rebranding is also part of a shift toward increased efficiency and simplified user interactions, with new frontend interfaces, stablecoin on/off ramps, and optimized governance systems being introduced alongside the transition.","summary":"DAI is a decentralized stablecoin by MakerDAO on Ethereum, maintaining a 1:1 value with USD, backed by collateralized cryptocurrency assets.","images":[{"id":"QmcaBD3XgbZkwNKYdVppQmivxRWYh8RKfjgNoRVD9wMPWg","type":"image/jpeg, 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Protocol\",\"timestamp\":1664022593864},{\"id\":\"imx9cd9mhmb\",\"url\":\"https://makerdao.com/en/whitepaper/#the-dai-stablecoin\",\"description\":\"Overview of DAI\",\"timestamp\":1664023125736},{\"id\":\"0zz7ok36k80o\",\"url\":\"https://makerdao.com/en/whitepaper/#maker-vaults\",\"description\":\"maker vaults\",\"timestamp\":1664023145479},{\"id\":\"qwanejmyj2g\",\"url\":\"https://makerdao.com/en/whitepaper/#liquidation-of-risky-maker-vaults\",\"description\":\"Liqiduidaion\",\"timestamp\":1664023205290},{\"id\":\"r0fg6218dwp\",\"url\":\"https://www.gemini.com/cryptopedia/dai-stablecoin-what-is-dai-token\",\"description\":\"Gemini\",\"timestamp\":1675497624426},{\"id\":\"5hxjy7lnpz2\",\"url\":\"https://www.kraken.com/learn/what-is-dai\",\"description\":\"Kraken\",\"timestamp\":1675497636760},{\"id\":\"w3cdk9f3zqm\",\"url\":\"https://ethereumprice.org/guides/article/dai-savings-rate-explained/\",\"description\":\"DAI 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