DAI stablecoin

DAI is a decentralized, crypto-collateralized stablecoin born from the Maker Protocol and governed by MakerDAO, and it aims to stay near a one-to-one peg with the US dollar. It exists as an ERC-20 token on Ethereum and works with many wallets, smart contracts, and dapps. Users create DAI by locking supported crypto into vaults and generating tokens against that collateral. Vaults require overcollateralization so the locked assets are worth more than the DAI issued. If a vault falls too low in value, automated actors called keepers can trigger liquidation to protect the system. When you repay DAI to retrieve your collateral you also pay a stability fee, which acts like interest and helps balance supply and demand. DAI holders can also lock their tokens into a DAI Savings Rate contract to earn a yield paid from system fees. This mix of vaults, fees, and savings creates a set of rules that work without a central bank or single issuer. People use DAI as a stable medium of exchange on-chain, to hedge against crypto volatility, to take profits without leaving decentralized finance, and to power payments in apps and services that accept crypto. Because it is backed by a basket of crypto assets and by other stablecoins, it spreads risk across different supports and reduces reliance on a single reserve. Governance is community-led and votes determine which collaterals are allowed and what rates apply, so holders can influence safety parameters. The model brings important benefits: it enables permissionless access to a dollar-like unit, supports financial inclusion for people without reliable banking, and keeps users in control of their private keys for self-custody. Yet DAI is not without risks. Some collateral types remain volatile, and any severe drop in their value can pressure the system. Part of the backing may include centralized stablecoins, which introduces counterparty exposure and can amplify stress during institutional failures. Governance itself can face contentious choices that affect stability. In short, DAI tries to blend algorithmic mechanisms, overcollateralization, and decentralized governance to offer a stable digital currency that lives on-chain. It is a practical tool for DeFi users who seek a stable settlement medium while still accepting that the system depends on sound collateral, active governance, and resilient market participants. In this way DAI stands as both shelter and wager in the wide, changing sea of crypto.