This is a chapter from the Token Economy Series. All subchapters are collapsed under their subchapter headings to make the page more readable. Find copyright information on this text and about the book an the end of the page.
DAI is a P2P Stable Token operated by MakerDAO. Stability of value is one of the most important functions of money, so it can fulfill its purpose as a unit of account and a reliable store of value. As previously mentioned, many traditional cryptocurrencies don’t come with an inbuilt stability mechanism. Dai (DAI) was conceptualized with the purpose of bridging this gap. Dai was also one of the first DeFi applications to be explicitly governed through the vehicle of a DAO called “MakerDAO.” The system has two tokens: DAI and MKR. While the purpose of DAI is to provide a stable payment token which is pegged to the U.S. Dollar, the purpose of the MKR token is to grant voting rights to co-govern the macroeconomic policies of the stable token protocol and other strategic operational questions.
Disclaimer: This chapter repeats many concepts that have already been introduced in a previous chapter on Stable Tokens, but goes much deeper into the use case of MakerDAO. The first subchapter titled “History in a Nutshell” can be skipped if you are already familiar with the stable tokens in general or the use case in particular. Furthermore, please note that Dai and MakerDAO have historically been subject to frequent changes. Assuming that this trend continues, certain details described in the following chapter might therefore be out of date at the time of reading this book. Stable tokens in general and alternatives to DAI are explained in another book of the Token Economy Series titled “Money, NFTs & DAOs.”