DAI for Beginners
DAI, like a good number of other stablecoins, is a collateral-backed coin whose value is pegged to that of the US dollar. It is a token based on the ERC-20 protocol, which runs on the Ethereum blockchain. Launched in 2017, it is the brainchild of MakerDAO, and its founder and CEO is known as Rune Christensen.
There are plenty of features that make DAI stand out from all other stablecoins. Let us take a look at some of them.
One of the most outstanding features of DAI is its decentralization. The DAI token is backed by Ether and has its price stability maintained using smart contracts. As such, it does not rely on any third party.
Rather, its network operates under preset rules that govern the relationship between DAI, ETH and a third token known as Maker (MKR). It is a truly decentralized and trustless stablecoin that can’t be censored.
Unlike a majority of stablecoins that are fiat-collateralized, DAI is a crypto-collateralized token. This makes a world of difference because it does not require a company’s word or third-party audits to confirm the existence of a peg.
Instead, you can confirm the existence of ETH reserves backing up the coin at all times on the publicly visible Ethereum blockchain.
Governance Token (Maker)
As mentioned, DAI’s operations are closely linked to ETH and MKR tokens. You might be familiar with ETH but probably not so much with Maker. Maker is a governance token for DAI created by the Maker Decentralized Autonomous Organization (MakerDAO).
Just like DAI, it is an ERC-20 token. Its holders are in charge of business logic, risk management and other governance roles on the network.
Stablecoin Comparison Table
|Stablecoin||Censorship Resistance||Transaction Fees||Peg Effectiveness||Adoption by Casinos|
|DAI||Resistant to censorship||ETH Gas fees for all transactions||Moderately effective||Least widely adopted|
|US Dollar Coin (USDC)||Not resistant to censorship||No fees for inbound transactions, Gas fees for outbound transactions, No fees for bank wires||Highly effective||Second most widely adopted|
|Tether (USDT)||Not resistant to censorship||No fees for Tether deposits and withdrawals, 0.1% for fiat withdrawals and deposits||Frequently deviates||Most widely adopted|
|Paxos Standard Token (PAX )||Not resistant to censorship||0.1% for all deposits and withdrawals||Highly effective||Third most widely adopted|
DAI Stability Mechanism
As a crypto-collateralized stablecoin, DAI maintains its stability courtesy of the backing of Ether. But how is this possible seeing as Ether is itself an unstable cryptocurrency? The stability mechanism for this token is quite high-level but the following explanation should give you a basic understanding of the concept.
It all makes use of a system known as Collateralized Debt Position (CDP). Anyone who wants to acquire DAI tokens sends ETH to a CDP. In exchange for the ETH, the sender can withdraw DAI. But it’s not as simple as a 1:1 exchange ratio. In order to balance the coin’s price at $1 at all times, it uses an approach known as overcollateralization.
In order to access DAI tokens, you need to pay for the DAI and add a stability fee on top. When the value of DAI drops below $1, the governance team increases the fee to increase DAI’s price. This reduces the supply and drives prices up. Similarly, when DAI price surpasses the $1 mark, they reduce the stability fee to make DAI cheaper. In turn, this increases supply and reduces prices.
Note that the governance system is not a centralized institution. Rather, it consists of holders of the MKR token.
DAI Casino Bonuses
At DAI casinos, you will find a wide range of alluring bonuses to keep you coming back for more. Take a look at some of them below.
No Deposit Bonus
As you can tell from its name, this is a bonus you get to enjoy without having to make any deposit. All you need to do is create an account on a casino. Unfortunately, it is only available on a handful of platforms. With this bonus, you can get a feel of the site without having to commit any funds.
Every DAI casino worth its salt has a welcome bonus. In most cases, this bonus covers the first four or so deposits. It is often a generous bonus package, one that can give you a chance to explore the variety of games on offer.
Periodic/ Seasonal Bonuses
You will often find weekly, monthly and at times, even daily bonus offers. There could also be a range of seasonal offers that can keep things fresh and exciting.
Like other businesses, casinos reward loyal clients with various tokens of appreciation. These bonuses can often give you the opportunity to join VIP ranks and go up the ladder over a period of time to access even more benefits.