Dai

Dai is a stablecoin issued by MakerDAO, a decentralized protocol built on Ethereum. Users deposit collateral (primarily ETH, but also other crypto assets) into smart contracts to mint Dai at a 150% collateralization ratio or higher. The protocol maintains Dai's peg to the US dollar through a system of stability fees, savings rates, and collateral liquidations. Dai supply expands when demand for leverage is high and contracts when users repay debt, making it endogenously managed rather than custodially backed.

For traders, Dai functions as the primary on-chain stablecoin for non-custodial leverage and derivatives positioning. Its deep liquidity pools across major DEXs make it a core settlement layer for spot-to-perpetual arbitrage and collateral cycling strategies. Supply growth often signals risk appetite in DeFi; contraction signals deleveraging. Dai's stability mechanism creates basis dynamics worth monitoring—the stability fee directly impacts funding rates on leveraged positions, while collateral composition shifts reveal institutional conviction in specific assets backing the system.