About DAI

Dai was launched in December 2017, almost three years after its governing decentralized autonomous organization (DAO) called MakerDAO was created.

Because the cryptocurrency is pegged to the dollar, dai’s price typically remains around the $1 mark. However, there have been times when its price has shifted away from that level. That usually happens when supply and demand for the stablecoin changes. When supply is high but demand is low, dai’s price tends to hover beneath $1, and vice versa.
Dai doesn’t have a maximum supply, as it is issued on demand by those who provide the necessary collateral. Dai has a burning mechanism that can be triggered by users who are in debt when they repay the principal of their loan value. However, interest payments – also paid in dai – will recirculate onto the open market.

The stablecoin can be issued only when users submit the proper collateral at the indicated collateralization rate.

How Does Dai Work

Dai resides on the Ethereum blockchain. It doesn’t have a native consensus algorithm or any specific features other than the ones provided by Ethereum itself. The creation of dai occurs when a user borrows against their locked collateral – usually 150% of the loaned amount is required upfront as collateral. For example, if you wished to mint $1,000 worth of dai, you would need to deposit $1,500 worth of ether. The amount of borrowed dai will need to be repaid within a certain period or you will automatically lose the collateral.

To maintain its peg to the U.S. dollar, dai relies on a “target rate feedback mechanism,” or TRFM. If the value drops below $1, the TRFM increases to move the price back to the original peg. Such a development allows dai holders to realize a profit and demand for the stablecoin to increase. The process of adjusting the price occurs in a decentralized manner through a software protocol governed by MakerDAO.

Creating dai doesn’t require express permission from anyone, as the protocol is accessible to everyone. Dai and the MakerDAO use an oracle system to collate price data from various external price feeds. Any price feed update is written to the Ethereum blockchain through smart contracts that are owned and deployed by feed operators.

In this case, we see that the volume of the ِDAI has fluctuated a lot, which is very normal for stable coins.Demand for stable coins is increasing and decreasing for various reasons.One of the most important reasons for the volatility of stable coin volumes is the sharp fall and rise of the market.Because if there is a sharp drop, everyone will buy with their stable coins, which will increase demand.

When we compare the top stablecoins on the market, we find that the older stable coins on the market have a large volume.

• USDC
  This Stablecoin has the highest volume with an average 8.3B per month.
• USDT
  USDT is one of the oldest in the market and in average it has 4.7B Volume per month.
• DAI
  This stablecoin Which is in the third place on average has 2.9B Volume per month.
• BUSD
  The last rank in this chart is for BUSD with average 30M per month

As I mentioned above, the demand for stable coins is directly related to the market situation.Here we have the bitcoin price chart.In parts of the market where there are sharp price fluctuations, we see that the demand for DAI has also increased, so we find that the market has a great impact on demand.

When demand for a StableCoin rises sharply, the StableCoin moves away from its original price of $ 1.

This chart shows what DAI users are most likely to use this stablecoin for.As you can see, Diffay always ranks first in the type of use so this shows that this stable coin is very popular among DEFI users.

Here are the top 4 exchanges in terms of DAI usage.Uniswap, which is also a decentralized exchange, ranks first in DAI exchange volume.Bainance Exchange, which is the largest centralized exchange, ranks third in the volume of DAI usage.

DAI Stablecoin is a Quinn that was created later than its competitors, but it is still very popular and, as you can see, it has a lot of usage.

• The average monthly volume of DAI is 2.9B.
• The most use of this stablecoin is in DEFI.
• Most DAI exchanges take place in a decentralized uniswap exchange.

Conclusion

Thanks for reading

All data used are from Flipside Crypto.
My Twitter :Sepehrmhz8.

Methods

Here we going to know volume changes of DAI and examining one of the main reasons for the increase in demand, namely the market trend from May 2021.
I rank the market stablecoins.
Important point in this analysis showing the What is DAI most used for.
All data is from May 2021 till May 2022.

Introduction

Data Analysis