Before we get started, let me fill you in on DAI. So, DAI is a stablecoin that's linked to the value of the good old US dollar (1 DAI = 1 USD), and it's managed by MakerDAO. Basically, it's backed up by other cryptocurrencies, and it uses smart contracts to regulate its supply according to demand. And when it comes to picking which assets to use as collateral, the DAO plays a big role. If you want to have a say in those decisions, you'll need to have some MKR token.

MakerDAO came into being back in 2014, and on December 18, 2017, Dai and all the smart contracts that go with it were officially launched on the Ethereum network. It's pretty impressive that even though the only collateral option at the time was Ether, and its value fell by over 80% during the first year, the price of Dai managed to stay pretty close to one US dollar.

(Gotta love that "Code is Law" philosophy.)

Fun fact: In March 2020, as a result of extraordinary market volatility at the onset of the COVID-19 pandemic, Dai experienced a deflationary deleveraging spiral that, at its peak, caused it to trade for up to USD $1.11 before returning to its intended $1.00 valuation

We will see those metrics in the same order: Change in DAI supply; DAI volume (which covers any transfer event); the number of transactions involving DAI and the number of addresses that have integrated with DAI (either as a receiver or sender). All of these metrics cover the last 90-day period. My opinions regarding these metrics are based on the data from the 90-day period leading up to March 3rd.

Oopps as easily can be seen, there is an anomaly during the second week of December. I ran a query to investigate. I narrowed my search to transactions that occurred between December 10th and December 14th and sorted them by DAI amounts. It appears that the high transaction volume during this period is primarily due to 6 addresses associated with Sonne Finance.

I am sharing output of this query on the right side.

Based on my observations, I suspect that there may be some form of wash-trading activity going on. After some surf on Etherscan, wrote another query that excludes transactions from these 6 addresses and create a new graph for a clearer view.

So basically we are manipulating data for not manipulated.

It's worth highlighting that we excluded just six addresses from our analysis, and this had a significant impact on the volume metric. If you take a look at the last graph, you'll see two buttons for transactions: "NUMBEROFTRANSACTIONS" represents the transactions that include the 6 addresses , while "TXNS2" represents the excluded version. There are only small differences between the two, for a few days.

I took a closer look at the addresses on Etherscan and observed that they are moving 6 million DAI between contracts for 50-100 times in some days. I don't blame anyone, and use the term wash-trading to describe transactions that turns between same a few addresses. They might have different reasons maybe just testing their contracts.

On the other hand, this case provides an excellent example of the potential benefits of Layer2 solutions. Just imagine moving 6 million dollars between your bank accounts 50 times in a single day - paying transaction costs with pennies it's quite impressive.

Conclusion for the first part: In the second week of the year, the supply of DAI, which refers to the deposited amount from the mainnet, has start to increase. Simultaneously, there has been a rise in the number of DAI users and transactions. While the volume also increased in parallel, a divergence occurred between volume and user count after the third week.

This divergence may indicate that large capital is choosing DAI. However, it is important to consider the price change and volatility of major cryptocurrencies. In the next section, we will create dApp-specific queries to gain a more comprehensive understanding of the fastest growing use cases of DAI.