Overview
Dai (DAI) is a dollar stablecoin created by MakerDAO, founded by Rune Christensen, and launched in 2017. It was the first major stablecoin not issued by a company holding dollars in a bank: instead, DAI is created when people lock up crypto as collateral and borrow against it.
In August 2024, MakerDAO rebranded as Sky and launched USDS, an upgraded version of DAI. DAI still exists, about $4.6 billion of it, and can be swapped 1:1 for USDS at any time.
How it works
- A user deposits collateral, such as ETH, into a “vault”.
- They can mint DAI worth less than the collateral, for example $100 of DAI against $150 of ETH.
- If the collateral’s value falls too far, it is liquidated to repay the DAI.
- A Peg Stability Module lets users swap DAI and USDC 1:1, helping keep DAI at $1.
Over time, Maker added real-world assets, mainly US Treasury bills, which now earn a large share of its income. DAI and USDS holders can earn the Sky Savings Rate (around 3.75% in spring 2026) by depositing them.
The DAI token
| DAI at a glance | |
|---|---|
| In circulation (Oct 2026) | about $4.6 billion |
| Target value | $1.00 |
| Highest point | about $1.22 (March 2020 crash) |
| Successor | USDS (about $9–12 billion in 2026) |
Risks
- Centralized backing. Much of DAI’s backing is USDC and Treasury bills held through partners, so it is less decentralized than it once was.
- Governance. Sky’s token holders can change rules, fees and collateral.
- Migration. Sky is promoting USDS, so DAI’s role may keep shrinking.
- Smart-contract and liquidation risk. In extreme crashes, as in March 2020, the system can come under stress.
DAI vs. the competition
| DAI | USDC | USDe | |
|---|---|---|---|
| Backing | Crypto, USDC, T-bills | Cash, T-bills | Crypto + short futures |
| Issuer | Sky (DAO) | Circle | Ethena |
| Earn yield | Sky Savings Rate | No | sUSDe |
Our verdict
DAI is a piece of DeFi history: the first stablecoin run by code and a community rather than a bank, and still widely used. It has a strong record of holding its peg.
But its backing has become more centralized, and the project is steering users to USDS. DAI is a useful tool, not an investment; spreading large amounts across more than one stablecoin can reduce risk.
This review is for information only and is not financial advice.