DAI — a collateral-backed stablecoin with no issuing company

DAI in plain words

USDT and USDC are backed by companies that keep dollars in a bank, while this stablecoin has no such company behind it. DAI comes into being as a loan against collateral: someone puts cryptocurrency into a vault program, and it is worth more than the DAI they take out. The office work is done by a program contract, that is, a program inside the network that carries out set rules on its own, so there is no firm with staff.

Here is an everyday example. You pawn an item worth more than the money you get for it. When you repay the debt, the item is yours again, and if it loses too much value, it is sold to cover the debt. DAI works the same way, except the "item" is cryptocurrency and a program does the pawnshop's job.

The rules of these programs come from the Sky project, which was called MakerDAO until 2024. Changes to the rules are put to a vote among holders of its SKY token. Where to keep DAI is covered in how to store crypto.

How the DAI stablecoin works

Where your DAI is now and what USDS is

In August 2024 MakerDAO was renamed Sky, and in September a new stablecoin, USDS, launched as DAI's successor¹. DAI is exchanged for USDS one to one, by choice and in both directions². In April and May 2026 major exchanges converted the DAI their clients held on the exchange into USDS³.

DAI is created when someone deposits collateral and disappears when the collateral is taken back

New DAI is born as a debt backed by collateral. You lock cryptocurrency in a vault and receive DAI, always less than the collateral is worth. This cushion is called over-collateralization, and it is there in case the price drops. When you pay the DAI back with a small fee, the collateral is released and the returned DAI is burned, that is, destroyed for good. If the collateral's price falls too low, liquidation kicks in: the program sells the collateral by itself to close the debt. The program learns the collateral's price from outside data sources (oracles), and their accuracy decides when the sale is triggered. How crypto issuance works in general is covered in what is issuance.

What DAI's collateral holds

DAI's collateral falls into three groups. The first is cryptocurrency locked in vaults. The second is the stablecoin USDC, which a special module of the protocol swaps for DAI one to one and back, and this helps keep DAI's price near the dollar. The third is government bonds issued as tokens, plus loans. So DAI depends on the company Circle, which issues USDC, and also on whoever holds the bonds and hands out the loans. The shares of these groups keep changing, so instead of figures, check the current composition.

How this kind of backing differs from the reports of ordinary stablecoins is explained in what are reserves.

Who runs DAI

All of DAI's rules, from the accepted kinds of collateral to fees and the savings rate, are decided by votes of SKY token holders. This token appeared with the rename from MakerDAO to Sky and replaced the former voting token MKR, and since May 2025 only SKY holders vote¹⁴. SKY is a separate token, and your DAI does not depend on it (what is a token).

Can you earn income on DAI

You can put DAI into the protocol's savings program and earn interest on it. The rate is set by vote and changes, so check the current value.

This is no bank deposit, and no government insures it ⚖️. All of DAI's risks still apply.

How DAI differs from USDT, USDC and USDS

Having collateral where other stablecoins have a company changes several of DAI's properties at once.

	DAI	USDT	USDC	USDS
Is there an issuing company?	no	yes	yes	no
Backed by the issuing company's reserves?	no1	yes	yes	no1
Is the backing visible on the blockchain?	yes2	no	no	yes2
Can anyone freeze the tokens?	no	yes	yes	depends on the network3
Built-in savings rate?	yes	no	no	yes

1. The collateral includes USDC and bonds, held by the protocol itself. ↩
2. The crypto collateral is fully visible, the bonds and loans only in part. ↩
3. On some networks USDS can be frozen, on others it cannot as of 20.10.2026; more in the questions below. ↩

Pros and cons of DAI, USDT, USDC and USDS

The choice here depends on which set of risks you understand better: trust in a company, or trust in collateral and code.

The real DAI on Ethereum and copies on other networks

DAI's native network is Ethereum, where it works as a token under the ERC-20 standard. Other networks carry copies brought over through a bridge (a service that moves a token from one network to another), such as Binance's copy on BNB Chain, and each such copy has its own contract. When you send DAI, the sender and the recipient must be on the same network. Check the contract address, that is, the address of the token's program on the network, against the official one, or you can easily end up with a fake token (phishing and scams). How to send a transfer safely is explained in how to send crypto.

The risks of DAI

• DAI depends most of all on the price of its collateral. In a sharp market crash the sell-off mechanism may not keep up, and then part of the debt stays uncovered and DAI drifts away from the dollar for a while.
• While a sizeable share of the collateral sits in USDC, any trouble with USDC hits DAI too.
• Companies and borrowers stand behind the bonds and loans, so you have to trust that the debt will be repaid.
• A bug in a program or a governance vote can change the rules your DAI lives by. The project calls itself decentralized, meaning independent of any single company, although the rules are changed by SKY token holders.

DAI has already broken noticeably from the dollar twice.

• On 12 March 2020 cryptocurrency prices crashed, the collateral sell-off mechanism failed, and for a while DAI cost more than a dollar, around $1.10⁵⁶.
• On 11 March 2023, as the US bank Silicon Valley Bank (SVB) collapsed, the USDC token fell to about $0.87⁷. DAI followed it below $0.90, because about a third of its collateral was held in USDC⁸.

Where to check current DAI data

The collateral's composition, the status of DAI and of the move to USDS, the list of networks and the current savings rate are all on the official site.

For the price and market cap, use an aggregator.

More detail on DAI history, MKR and program names

The first DAI, backed by a single kind of collateral, launched on 18 December 2017 and was later renamed SAI⁶. On 18 November 2019 DAI backed by several kinds of collateral came out, and the savings rate appeared at the same time⁶.

Exchanges converted balances on different days: Binance from 7 April 2026, Crypto.com on 10–16 April, OKX on 13–15 April, Coinbase on 4 May³⁹¹⁰¹¹.

The former MKR token can still be exchanged for SKY at a rate of one to 24,000, but since September 2025 a penalty has been withheld on conversion, and it grows by 1% every three months⁴¹². See the current penalty.

The protocol's programs have their own names. The USDC exchange module is called the PSM, and the bonds and loans in the collateral are known as real-world assets (RWA). The savings program for DAI is the DSR (Dai Savings Rate), the receipt for a deposit in it is the sDAI token, and for USDS the same mechanism is called the Sky Savings Rate (SSR).

On "Black Thursday", 12 March 2020, the price of ETH fell by about 43% in a day, some collateral went at auction for effectively 0 DAI, and the hole was covered by issuing new MKR⁵.

Frequently asked questions