Token Spotlight: the Dai Stablecoin
This is the first post in a series of “Token Spotlights” that will feature new tokens listed in the Dether beta app. Discover what they are, and why they’re important.
With the launch of the Dether beta app officially underway, we are thrilled to have the Dai stablecoin listed in the app. Users can not only store Dai in the Dether wallet, but they can also trade ETH for DAI in the app’s exchange feature.
Dai and the Dether vision
MakerDAO (creators of the MKR and DAI tokens), shares our vision of bringing a decentralized stablecoin, Dai, to solve volatility issues that are currently preventing blockchain technology from being adopted worldwide. By listing Dai in the Dether beta app, we aim to break barriers to blockchain and crypto adoption, enabling any individual or shop owner to easily switch from any cryptocurrency to a stable token stabilized against the value of the U.S. Dollar, and vice versa.
Having an easy way to have access to a viable stablecoin is more than important — it’s crucial if we really want blockchain technology to be adopted worldwide.
What is Dai?
The Dai stablecoin is pegged against the USD and borrowed against the Maker platform. Users “borrow” Dai by locking it into a collateralized debt position (CDP), which is in turn stabilized by autonomous feedback mechanisms. In short, the Dai is a cryptocurrency with price stability. (Check out this great video from Maker here, that breaks down the financial intricacies of how the Dai is backed).
Good for local businesses wanting to accept crypto
One of the main concerns that shop owners highlight when it comes to accepting cryptocurrency as a means of payment is volatility. Business owners feel that the high volatility of cryptocurrencies is not economically sustainable for their businesses. Dai solves this problem for cryptocurrencies.
By integrating Dai into the Dether beta app, we’re making pricing much easier for shop owners. Previously, shop owners may have worried about volatility when accepting cryptocurrency; however, shop owners can now avoid volatility by accepting cryptocurrency, and then automatically converting it to a stablecoin, such as Dai.
Good for the unbanked, and for crypto traders
Because of the Dai’s stable nature, it’s an ideal cryptocurrency for those looking for an alternative safe haven currency to the traditional USD or EUR. This is especially important in countries like Venezuela and Turkey, who have seen astronomical inflation rates over the past year. When the value of the lira or the bolívar crashes, obtaining traditional safe haven currencies is virtually impossible. Using Dether, an individual can get Dai without a bank account, and then store it safely in their Dether wallet, making it significantly more secure than storing physical cash.
Traders can also benefit from having the Dai available on Dether, as Dai is an ideal way to store speculative investments. Instead of cashing out on a centralized exchange and incurring high fees, users can hold their trading funds as Dai, which in turn holds its value with little fluctuation. Traders can lock in their profits without rushing to trade or cash out, only to find that their gains have dwindled due to market volatility in the meantime.