Swap DAI at the Best Rate

What is DAI?

DAI is the longest-running crypto-collateralized stablecoin. Instead of a company taking dollar deposits, smart contracts issue DAI as debt: a borrower locks collateral worth more than the loan, draws new DAI against it, and burns that DAI plus a stability fee to close the position. The system began as Single-Collateral Dai in December 2017, and the token trading today launched on 18 November 2019 when Multi-Collateral Dai replaced it.

The protocol behind DAI was built by MakerDAO, which rebranded to Sky in 2024 as part of its Endgame restructuring. The Maker vault contracts, the collateral portfolio and the governance process all continue to stand behind DAI under the new brand.

How DAI works

Every DAI is backed by surplus collateral in the protocol: crypto assets in vaults, stablecoin reserves in the peg stability module, and real-world asset positions approved by governance. If a vault's collateral value falls below its liquidation threshold, the position is auctioned off to cover the debt. The peg stability module swaps DAI and USDC one-to-one, which in practice anchors the market price tightly to a dollar.

Holders can deposit DAI into the Dai Savings Rate contract to earn a variable rate that governance sets from protocol revenue. Since September 2024 a converter contract also mints USDS from DAI and back at exactly one-to-one, so the two stablecoins share collateral, a surplus buffer and a peg while offering different feature sets.

How DAI is governed

MakerDAO pioneered on-chain governance: token holders pass executive votes whose code changes collateral types, fees, rates and system upgrades directly. With the Sky rebrand, the MKR governance token became SKY at a fixed rate of 24,000 SKY per MKR, and voting power now runs through SKY.

Governance is also DAI's control point. Votes decide which collateral backs the stablecoin, how large the USDC exposure may grow, and what happens in an emergency shutdown, so holding DAI means trusting that process to stay conservative.

What people use DAI for

DAI functions as a censorship-resistant dollar across DeFi: the contract has no blacklist or freeze function, which sets it apart from bank-backed stablecoins and from USDS, whose design allows one.

• Borrowing dollars against crypto collateral without selling it.
• Earning the Dai Savings Rate on idle balances.
• Serving as a quote and collateral asset across lending markets and decentralized exchanges.
• Holding a dollar token whose issuer cannot freeze individual addresses.

DAI risks and considerations

DAI's solvency depends on its collateral. A large share of backing has at times sat in USDC through the peg stability module and in real-world assets held via legal structures, so DAI inherits counterparty and regulatory risk from both, on top of crypto market crashes that can outrun liquidations.

Strategy risk is newer: Sky positions USDS as the flagship going forward, and while it has stated DAI keeps operating with two-way conversion, future incentives and integrations may favor USDS. Governance can also change DAI's parameters at any time through the on-chain process.