MakerDAO Takes Shape
Rune Christensen began developing the project that became MakerDAO in 2014. The goal was to create a decentralized credit system and a stable digital currency using Ethereum smart contracts.
ABOUT DAI
What Is DAI Crypto?
DAI is a decentralized stablecoin designed to trade close to the US dollar. The token is created through the Sky Protocol using supported collateral and can be transferred, traded or used across compatible decentralized applications.
Unlike fixed-supply cryptocurrencies, DAI has a variable supply that expands or contracts as tokens are created or removed from circulation. This page explains how Dai crypto works, how its supply and peg are managed, and the factors that can influence the Dai price and broader DAI crypto price stability over time.
KEY FACTS
DAI at a Glance
DAI combines a dollar-based price target with an on-chain system for creating, managing and removing tokens. Its supply changes according to activity within the protocol, while market trading determines the live DAI crypto price.
DAI ORIGINS
THE FOUNDATION
THE DAI LAUNCH
THE EXPANSION
How Was DAI Created?
DAI was developed to provide an on-chain asset that could be used like digital dollars without relying on a company to issue each token directly from a bank-held cash reserve. Instead, users could deposit supported assets into smart contracts and generate DAI against the value of that collateral.
The first version launched on Ethereum in December 2017. It accepted Ether as its only collateral asset and became known as Single-Collateral Dai, or Sai. The system later expanded to support multiple types of collateral and a wider set of mechanisms for managing DAI supply and stability.
Single-Collateral Dai Launches
The original Dai system launched in December 2017 with Ether as its only accepted collateral. Users could lock ETH in a position and generate Dai under the protocol’s borrowing rules.
DAI Expands Beyond Ether
Multi-Collateral Dai launched in November 2019 with support for approved collateral types. MakerDAO became Sky in 2024, with DAI remaining available alongside the newer USDS stablecoin.
UNDERSTANDING DAI
DAI Evolution
DAI has developed from an Ether-only stablecoin into a collateral-backed digital asset used across cryptocurrency exchanges and decentralized finance. Its core purpose has remained the same: provide an on-chain asset designed to maintain a value close to one US dollar.
Changes to the collateral system, governance structure and available protocol tools have expanded how DAI can be created and used. These developments have also influenced its supply, liquidity and ability to keep the Dai price near its target.
Single-Collateral Dai Launches
Single-Collateral Dai launched on Ethereum in December 2017. Users could deposit ETH and generate Dai through smart contracts, with collateral requirements protecting the system.
Multi-Collateral Dai Replaces Sai
Multi-Collateral Dai launched in November 2019 and replaced the original system. It introduced the current DAI token, additional collateral types and the Dai Savings Rate.
MakerDAO Becomes Self-Governing
The Maker Foundation announced its dissolution in 2021 after transferring operational responsibilities to the DAO. Governance became responsible for the protocol and its risk settings.
MakerDAO Transitions to Sky
MakerDAO rebranded as Sky in 2024 and introduced USDS as an upgraded stablecoin. DAI remained available within the ecosystem and continued trading under its existing ticker.
UNDERSTANDING DAI
How Does DAI Work?
DAI can be bought, received or exchanged like other crypto assets. It can also be generated by depositing supported collateral into a position governed by the protocol’s smart contracts.
Market supply and demand determine the live DAI crypto price. Collateral requirements, borrowing costs, liquidations, available liquidity and trading incentives are intended to help DAI remain close to its $1 target, but they do not guarantee an exact price.
01
Deposit Collateral
Deposit an approved asset into a supported collateralized position, where it remains locked while the position is active.
02
Generate DAI
Generate DAI up to the position’s permitted limit. The available amount depends on the collateral type and required collateral ratio.
03
Monitor the Position
The protocol tracks the collateral’s value. A position can be liquidated if its value falls below the required threshold.
04
Repay or Liquidate
Return the generated DAI and applicable fees to close the debt and unlock the collateral. Repaid DAI principal is removed from supply.
What Shapes the DAI Price?
The DAI price is intended to remain close to $1.00, but its market value is determined by buying and selling across exchanges and decentralized markets. Changes in liquidity and demand can cause DAI to trade slightly above or below its target.
Sky Protocol supports the target through collateral requirements, liquidations and conversion mechanisms connecting DAI with other assets in the protocol. These mechanisms can help reduce price differences, but they do not guarantee that DAI will always trade at exactly $1.00.
Protocol Collateral
DAI is supported by collateral managed through Sky Protocol. The value, composition and risk of this collateral affect the system’s ability to support the stablecoin supply.
Conversion Mechanisms
Protocol facilities allow supported assets, including USDS, to be converted into DAI under defined conditions. These conversions can create opportunities to reduce differences between the market price and the $1 target.
Market Demand
Increased demand can push DAI above $1.00 when buyers are willing to pay a premium. Increased selling can move the price below the target when available supply exceeds immediate demand.
Trading Volume and Liquidity
Markets with deeper liquidity can process larger trades with less price movement. Limited liquidity or fragmented trading activity can produce larger differences between venues.
Protocol Governance
SKY token holders can approve changes affecting collateral, fees, savings products and other protocol parameters. These decisions can influence demand for DAI and the risks supporting its supply.
Regulation and Market Access
Regulatory decisions, exchange listings and blockchain integrations can affect where DAI is available and how easily users can trade, transfer or use it.
What Is the Current Dai Price?
DAI is currently priced at 0.9998 USD. In US dollar terms, the current Dai price is $0.9998, placing it 0.02% below its $1 target. DAI has risen 0.02% over the past 24 hours.
Why Does DAI Trade Above or Below $1?
DAI can move away from $1 when buying and selling become imbalanced across exchanges and decentralized markets. Limited liquidity, market volatility, changing demand and the cost or availability of arbitrage can affect how far the price moves and how quickly it returns.
Can DAI Lose Its Dollar Peg?
Yes. DAI uses a soft peg rather than a guaranteed fixed exchange rate. A significant decline in collateral value, reduced liquidity, technical problems, regulatory disruption or a wider loss of market confidence could cause a temporary or prolonged depeg.
How Can You Use or Sell DAI?
DAI can be transferred between compatible wallets, traded on supported markets or used in decentralized-finance applications. Users can also convert it into USDS through Sky Protocol or supply it to separate products such as sDAI to access the Sky Savings Rate.
Selling DAI generally involves transferring it to a supported exchange or trading it through a decentralized market. The available cash-out methods depend on the user’s location, selected blockchain and the markets supported by the service.
Choose How to Use DAI
Choose whether to transfer, trade, convert or supply DAI. Confirm the token, blockchain and receiving network before continuing.
Select a Supported Service
Use an exchange, wallet or decentralized application that supports DAI on the selected blockchain. Check that the sending and receiving networks match.
Review the Rate and Costs
Review the quoted price, market liquidity, network costs and any service fees or transaction limits before approving the transfer or trade.
Complete the Transaction
Check the transaction details before sending DAI. If selling for fiat currency, follow the provider’s withdrawal process and retain the transaction record.
CASH-OUT CHECKLIST
Before You Cash Out DAI
Before you cash out DAI, compare the service’s availability, supported networks, quoted price, total fees and expected processing time. These details affect how much money you receive and whether the withdrawal can be completed in your location.
Confirm the token, wallet address and transfer network before sending DAI, and keep records of the sale, fees and funds received. Blockchain transfers generally cannot be reversed once confirmed.
Service and Verification
Provider Availability
Confirm that the service operates in your jurisdiction, supports DAI and offers your preferred withdrawal method.
Identity Checks
Review the identification, account-verification and withdrawal requirements before transferring DAI.
Price and Costs
Peg Deviation and Liquidity
Compare the quoted DAI price with the $1.00 target and check whether the market has enough liquidity for the amount being sold.
Total Costs and Timing
Compare trading, conversion, network and withdrawal fees, along with withdrawal limits and expected processing times.
Transfer and Records
Token, Wallet, and Network
Verify that the receiving service supports DAI on the selected network. If the funds are held as sDAI or stDAI, convert them into DAI through the supported process first.
Transaction Records
Keep records of the sale, transfer, exchange rate, fees and funds received.
Disclaimer Selling, exchanging or converting DAI may create tax-reporting obligations. The applicable treatment depends on the transaction, jurisdiction and individual circumstances.