Dai (DAI)

Dai (DAI) answers a hard question: can a dollar-pegged asset exist with no bank account backing it? Launched by MakerDAO in 2017, DAI maintains its soft peg to the US dollar through over-collateralised loans on Ethereum — borrowers lock up crypto worth more than the DAI they draw.

Its issuer rebranded to Sky in 2024, introducing a successor token (USDS) that DAI holders can upgrade to 1:1; DAI itself continues to exist and trade widely.

DAI is a decentralised, collateral-backed stablecoin. Users deposit approved assets (ETH, staked ETH, USDC, treasury-tokenised products and others) into the protocol and mint DAI as a loan against that collateral; if collateral value falls too far, it's automatically liquidated to cover the debt.

This structure means there's no single company holding 'the dollars' — solvency is enforced by smart contracts and an on-chain surplus buffer, coordinated by one of DeFi's oldest DAOs.

The peg is maintained by incentives: if DAI trades above $1, borrowing to mint and sell it is profitable, expanding supply; below $1, borrowers cheaply buy it back to repay debt, contracting supply. Stability fees (interest) on loans are tuned by governance to keep supply balanced.

A portion of the collateral is real-world assets and USDC — a design that improved peg reliability but introduced some reliance on traditional finance. DAI holders can also use “DSR” (Dai Savings Rate) mechanisms to earn protocol-distributed yield.

MakerDAO was founded by Rune Christensen; single-collateral DAI (backed only by ETH) launched in December 2017, with Multi-Collateral DAI following in November 2019.

Key events: DAI survived the March 2020 “Black Thursday” crash (which triggered emergency governance); weathered the 2022–23 rate cycle by adding real-world Treasury-backed collateral; and in 2024 MakerDAO rebranded to Sky, launching USDS and SKY tokens while keeping DAI running.

DAI has no maximum supply: it expands and contracts with borrowing demand. The MKR/SKY governance token captures protocol economics instead.

Live DAI supply and market cap are shown above; DAI can be upgraded 1:1 to USDS through the Sky protocol.

DAI is tradable on several AUSTRAC-registered exchanges with AUD deposits, though availability is narrower than for USDT/USDC — check your exchange's listings. It is also available on decentralised exchanges for wallet users.

Tax-wise, stablecoins are CGT assets in Australia; swapping AUD→DAI→other crypto creates disposals along the way. Interest-like yield earned from DSR-style mechanisms is generally ordinary income.

DAI's risks are structural rather than issuer-centric: a severe collateral-price crash faster than liquidations can handle, smart-contract failure, governance attacks, or contagion from its USDC/real-world collateral. The March 2023 USDC depeg temporarily dragged DAI off-peg precisely because of that collateral mix.

It is the most battle-tested decentralised stablecoin, but decentralised-backed is not risk-free. Never hold more meaningful savings in any stablecoin than you can absorb losing.