Here’s a short excerpt for the article “Decoding DAI: Understanding the Decentralized Stablecoin That Puts USD in Blockchain”:
DAI is often misunderstood as a cryptocurrency, but it’s actually a decentralized stablecoin pegged to the value of the US dollar. Unlike other cryptocurrencies that fluctuate in value, DAI maintains a fixed exchange rate with the dollar, making it an attractive alternative for crypto investors and users seeking stability in their transactions.
The primary concept behind DAI is simple: it uses a smart contract on the Ethereum network to maintain its value relative to the US dollar. This makes DAI a stable store of value and a unit of account that can be used for various purposes, including payments, lending, and trading. One key aspect of DAI’s design is its ability to self-correct and adjust its supply to reflect market conditions, all without the need for central authorities or intermediaries.