What DAI is
Dai (DAI) is a US dollar-pegged stablecoin created by MakerDAO in 2017. It differs from USDT and USDC because no single company issues it: DAI is minted against on-chain collateral rather than a bank account of reserves. It was the first widely used decentralized stablecoin.
In September 2024 MakerDAO rebranded to Sky and launched USDS as DAI's upgraded successor. DAI was not retired: a converter swaps DAI and USDS 1:1 in either direction, and both remain in use. In September 2026 roughly $5 billion of DAI and $6.5 billion of USDS were outstanding.
How it works
DAI and USDS are minted when users lock collateral (ETH, staked ETH, tokenized real-world assets and more) in the protocol's vaults. Positions must stay over-collateralized or they are liquidated, and repaying the debt releases the collateral. The peg holds through arbitrage (when DAI trades above $1, minting and selling it is profitable) and a Peg Stability Module that swaps DAI for USDC at 1:1 to absorb deviations. A large share of the backing now sits in US Treasuries and other real-world assets.
Use cases
DAI is used across DeFi as a stable unit of account, in lending markets, trading pairs and yield strategies, and by users who prefer not to hold a company-issued stablecoin. Newer integrations increasingly use USDS, which earns the Sky Savings Rate, but DAI remains deeply embedded in older protocols and contracts that were never migrated.
Tradeoffs and criticism
DAI briefly traded below $0.95 in the March 2020 ETH crash and again during the March 2023 USDC depeg, since part of its backing was USDC. Over-collateralization is capital-inefficient compared with fiat-backed stablecoins. Reliance on USDC and US Treasuries as backing makes it more efficient but less decentralized than the original ETH-only design, and having two stablecoins from one protocol splits liquidity.
Where to track DAI
See Sky for the protocol and governance token, stablecoin for the category, and the free DeFi TVL endpoint for on-chain protocol data.