DAI, a fully collateralized stablecoin that was created by Maker DAO (Decentralised Autonomous Organisation) and is currently regulated by Rune Christensen. DAI seeks out to reduce volatility in cryptocurrencies and keeps its value soft-pegged at one U.S. Dollar.
Are you looking to buy DAI but don’t know where to start? Continue reading to find out everything about DAI and how to buy it in a few easy steps.
Let’s get right to it!
You can also read more articles on crypto wallets and tokens. CoinStats: How to Buy Shiba Inu and IDEX Review, etc.
What exactly is DAI?
Dai is the original stable, decentralized and collateral-backed cryptocurrency.
DAI token is an ERC-20 token. It attempts to maintain a stable 1:0 value with the U.S. Dollar by locking other cryptocurrency assets in smart contract. It’s the native token of the Maker Protocol – a decentralized autonomous ecosystem of smart contracts running on the Ethereum blockchain.
MakerDAO also uses the DAI token as the key. Lenders can use collateralized loans to obtain a loan. They lock away their assets. DAI can be created when MakerDAO loans are taken. It is used as a stabile Ethereum token to purchase things and can be borrowed by users who then repay it.
What does DAI do?
DAI, an Ethereum-based stablecoin, is a constant $1 value. It is achieved through the use of an automated smart contract system built on Ethereum. DAI stablecoin’s price is indirect pegged to US dollars and collateralized with other cryptocurrency.
DAI aims to reduce the volatility of trading on the blockchain by keeping the value of $1 since it’s soft-pegged to the dollar.
DAI is a decentralized autonomous organisation (DAO) that operates under the control of DAI. This makes DAI more attractive to crypto enthusiasts, as decentralization has always been a key component to all cryptocurrencies.
What are stablecoins?
Stablecoins, a cryptocurrency that is tied to an underlying assets’ value, are cryptocurrencies. You can choose to have the underlying asset be any commodity, like gold or fiat currencies. DAI is tied to the U.S. dollar’s value, so one unit of DAI equals $1.
Tether (USDT), USD Coin, USDC and Wrapped Bitcoin are all popular Ethereum-hosted stablecoins.
DAI is a Stablecoin But With A Twist
DAI, unlike other stablecoins, is not issued by and managed centrally. And, in contrast to other stablecoins, which rely on a customer’s trust in their underlying asset deposits, Maker Protocol uses smart contracts to back the value of DAI with collateralized crypto deposits.
In order to create DAI, the users need to deposit collateral assets in Maker Vaults. You can always deposit collateral that is greater than what you borrow to generate DAI. After repaying the principal plus the stability fee, they can withdraw the collateral. MakerDAO issued the MKR governance token in addition to DAI. MKR holders manage the Maker Protocol via executive voting and governance polling.
DAI: Why buy it?
Before helping you with your DAI purchase, let’s first look into a few factors that make DAI a good investment.
DAI gives stability
Stability is one of the main reasons you should buy DAI. DAI, being a stablecoin means that it retains USD’s value. DAI is used as an asset hedge to protect against changes in price. You can decrease the volatility of crypto markets by regaining your DAI deposit once you have repaid the loan.
If you put $200 in Ethereum (ETH), as collateral, and it skyrockets in price, your full amount will be refunded. You can also keep your DAI borrowed and return it to vault after the price of ETH increases or stabilizes.
DAI provides financial stability to residents of highly volatile countries, such as those where their local currency fluctuates.
DAI provides unrestricted access to funds
DAI is an open-source stablecoin which allows for transparent and unrestricted access to funds. DAI’s smart contracts allow transactions to be executed by themselves. i.e., they don’t warrant permission from any central authority. Although governments have the power to restrict fiat currency access by setting withdrawal or transaction limits, DAI gives users full control over what they hold.
Fast, safe, and cheap transfers
Traditional money transfers are time-consuming and costly. DAI transfers are instantaneous, safe, and more efficient.
You can earn income from holdings
DAI allows holders to generate income through the locking of their assets in smart contract. As per the Dai Savings rate (DSR), the smart contract that self-executes distributes earned interest to the holders. MKR token owners can set the DSR, an interest rate through an executive ballot. DAI may sometimes differ from USD rates. The value of DAI could also fluctuate by just a few cents depending on which exchanges they trade. DAI holders can take advantage of arbitrage by selling or buying DAI to quickly make a profit.
The best place to buy DAI
DAI can also be bought on various cryptocurrency exchanges. You can view DAI exchanges on CoinStats’ market page. Compare the exchanges’ security, user experience, fee structure, supported coins, etc., to choose the one that has the characteristics you need, such as affordable transaction fees, an intuitive platform, round-the-clock customer service, etc. You should also consider whether cryptocurrency exchanges are regulated by the Financial Industry Regulatory Authority, etc. and allow you to purchase DAI with your preferred payment method.
Let’s look into some of the most poplar exchanges that support DAI.
Coinbase, the US’s largest cryptocurrency exchange and second in transaction volume behind Binance is Coinbase. It has over 98 million users and approximately $256 billion of assets. Coinbase lets you trade over 130 different types of cryptocurrency.
In 2021, the stock exchange was valued at over $100 billion. The “Coinbase Effect,” meaning the value of a crypto asset tends to rise exponentially within days after getting listed on the exchange, demonstrates Coinbase’s influence in the crypto industry.
Coinbase is a well-known platform for its outstanding features and services. Coinbase’s robust security and 24 hour customer service has attracted many beginners. Coinbase has a competitive edge in this space thanks to its international reach, easy-to use platform and affordable fees.
Prices for Coinbase vary depending on where you live. For debit or credit card purchases, there is an additional 3.99% fee. The best method to purchase DAI online is through bank transfers, which have no fees for deposits and only a 1.49% transaction fee.
Experienced traders, wanting to reduce their fees can use Coinbase’s “Pro” version, where rates start at 0.50% and decrease in proportion with trading volume.
Kraken is the oldest, largest crypto-exchange platform in the United States. It also offers advanced trading tools such margin. Kraken provides five options for investment: fiat, crypto, futures, margin trading and over-the–counter (OTC).
Kraken offers the DAI/USD and DAI/EUR trading pairs for Dai. It is one of few reliable exchanges that allows users to buy DAI with Euro.
Kraken’s fees start at 0.26% and drop as the trading volume increases. Consider that buying DAI on Kraken requires some trading experience and doesn’t have the same ease-of-use as on Coinbase.
Uniswap (decentralized cryptocurrency exchange) is the most popular by volume. The Uniswap platform is a collection of smart contracts that run on Ethereum. It allows peer-to-peer trades (P2P), without the need for a central intermediary.
Using liquidity pools, users can swap Ethereum-based tokens almost immediately with Uniswap. It’s one of the best DEXs to purchase DAI with any Ethereum token that has liquidity on the exchange, such as ETH, MKR, BAT, LINK, etc.
DAI can be purchased with fiat currencies, such as USD or EUR. Uniswap is not able to buy DAI using fiat currencies such as USD, EUR and GBP.
Our step-by-step guide will show you where to find DAI.
WARNING:It is risky to invest in cryptocurrency. You should not expect to see your token’s price change after you have finished reading this blog post. Be aware of all risks.
Step 1: Selecting an exchange
An exchange which trades DAI tokens is required in order to buy DAI. There are several cryptocurrency exchanges that accept DAI, including Coinbase, Kraken and Bitfinex.
Keep in mind that not all cryptocurrency exchanges allow you to purchase fiat currencies. Some exchanges may also have restrictions or regulations based on where you live. Before you choose an exchange, ensure it fulfills all of your requirements.
We chose Kraken to illustrate the purchasing process.
Step 2: Register an Account
You can register for an account once you have found the best exchange.
You must first sign up for the exchange. Secure your account by creating a strong password
Once you have created an account, you will receive a confirmation email from the exchange. After you have confirmed your email address, you are able to use the platform.
Remember that almost all exchanges require KYC (Know Your Customers) verification. Your address must be provided along with a valid government-issued identification card (I.D.). You must submit your address and a Government-issued valid identification card (I.D.) in order to be verified before you can start trading.
Step 3: Funding Your Account
The next step is to fund your account.
Different payment options can be used for funding your account depending on the exchange. Fiat currency can be deposited into your account via credit or debit cards, PayPal, and PayPal. It is also possible to deposit crypto currencies.
Before you proceed, please make sure that you compare the deposit options available and any associated fees.
Step 4: Purchase DAI
You can buy DAI once your account has been successfully funded.
Prior to proceeding, you will need to choose which currency pair (USD/DAI/ETH/DAI), You can then purchase DAI tokens after confirming that your amount is correct. DAI tokens are available once your transaction has been approved by the exchange.
Note: Since DAI is pegged to the USD, it’s best to check the price first to ensure its current price is either $1 or lower. It is best to wait until the price drops before purchasing if it exceeds $1. You can check here the DAI price before you decide to buy.
How to keep your DAI safe
When buying cryptocurrency, another important step is to ensure that it’s safe. While you can opt to let your DAI remain on the exchange, it’s much safer to transfer your tokens to a decentralized custodial wallet for extra security. You have unique keys for each wallet, which means that only you can access your funds.
There are two kinds of decentralized wallets.
Hardware or cold Wallets
Hardware wallets store cryptocurrency offline and are physically attached devices. These wallets are very similar to pen drives, which must be connected to the Internet every time you need to access your money. While cold wallets can be more expensive, they offer greater security. Avoid being conned by scammers and research different cold wallets.
Software, or hot Wallets?
Hot wallets operate online and are digital, unlike cold wallets. They are easier to find, but less secure and more susceptible to hacking.
Soft wallets can be installed on your desktop or mobile device, connected to cryptocurrency exchanges, and you can access your funds immediately.
DAI can be stored in Ethereum software wallets such as MetaMaskOr TrustWallet. Or, opt for a hardware wallet like this Trezor Remember to keep your key.
CoinStats: How do I buy DAI?
Connect your wallet to CoinStats. Then, swap your tokens for DAI. CoinStats has over 250 crypto exchanges, and more than 8,000+ coins.
We will walk you through the steps to buying DAI with CoinStats.
Step 1: Open an account
To purchase DAI, you must have significant crypto tokens like Bitcoin, Ethereum, etc., in your wallet. Register or create an Account on Coinstats.app to proceed. Once you’ve registered an account, enter DAI in the search field.
Step 2: Connect Your Wallet
Click “Buy DAI” in the upper right corner. Scroll down to the “swap” feature and connect the wallet where you store your tokens.
Once you click “Connect,” you’ll see various wallet choices offered by CoinStats. Connect your wallet by searching for it.
It can be connected by either scanning QR codes via WalletConnect, or manually entering the Blockchain/Crypto address and Wallet address into your mobile or web application.
Step 3: Choose the token
Connect your wallet and select the token to be swapped by entering data in USD/EUR, cryptocurrencies or both. We can swap ETH for DAI, or purchase DAI with Ethereum. If you can’t find DAI in the swap, you can import it manually by using the contract address. Select the ETH token from your wallet in the “From” drop-down option, and the DAI token in the “To” field.
Step 4: Swap Crypto
For more options, click Advanced Options. When you’re finished customizing, scroll down to the bottom of your screen and click the “Submit Swap” button.
After you’ve submitted your swap request, you’ll be prompted to confirm it. To begin the swap, review the information displayed on your web or mobile app screen, and click the “Confirm” button.
The transaction has been processed. Your gas parameters will determine the pace at which your transaction is processed. You can trace your transaction from the loader at the bottom right corner of the wallet’s home page.
NOTE: You’ll be charged Network Transaction fees, also known as gas fees. The cost required to execute a transaction on blockchain is known as Network Transaction Fees. Gas fees can be described as being paid in the local currency of the network. For example, Ethereum is used for Ethereum transactions. CoinStats charges an additional swap fee.
Things to consider before buying DAI
In order to make a safe and secure investment in cryptocurrencies, you need to thoroughly investigate the tokens before making any investments.
Before investing in DAI tokens, consider the following:
Collateralization:DAI’s value is determined by MakerDAO’s underlying collateral. MakerDAO is a lending platform which powers DAI. DAI allows anyone to borrow money using any cryptocurrency as collateral. Overcollateralized loans require that you deposit more crypto than what you are borrowing. As of August 2022, the minimum collateralization rate of a “vault” of ETH is 170%, meaning that you would have to collateralize $170,000 worth of ETH to receive $100,000 worth of DAI.
DAI has $10.6 billion in crypto assets, and Huntington Valley Bank’s $100 million as backing. Daistats.com reports that it has a 141% excess of collateral.
Stablecoins:DAI, which is tied to the US Dollar, is designed to ensure price stability and protect against market swings. Stablecoins are designed to enable investors to trade only in crypto, without worrying about large swings in assets value. Therefore, stablecoins won’t grow or fall in value and shouldn’t be bought to make any money.
Competition:Stablecoins are becoming more competitive with many new projects like Tether and DigixDAO launching price-stable cryptocurrency.
Which is the cheapest way to buy DAI?
Decentralized exchanges (DEXs), such as Uniswap and Bitfinex or SushiSwap are the best way to purchase DAI.
How to buy DAI using cash
Coinbase, Kraken and Changelly allow you to purchase DAI using cash in fiat currencies. When choosing an exchange make sure it accepts credit cards or debit cards as well as wire transfers and Apple Pay deposits.
Ensure to consider geographic limitations and the exchange’s security before initiating any transactions.
Dai’s primary purpose is to supply liquidity for DeFi-related projects. More than 400 DeFi applications have already integrated Dai.
Dai holders are motivated to put their assets into liquidity pools and earn trading fees. This is in return for creating a market. There are many services that lend money on DAI deposits.
- Users of Coinbase can earn two percent annually on DAI deposits. Users can convert DAI into fiat with the Coinbase Card.
- dPiggy dApp allows you to make interest payments and get your monthly profits used to buy various crypto assets.
- You can also use Bitcoin to create DAI.
DAI is well on its way towards becoming the trustless mainstream currency. It was the fourth largest stablecoin in terms of capitalization at 5.5 billion Dai as of July 2021.
Advice on Investments
Information on this site is for informational purposes only. CoinStats does not endorse any recommendation to sell, buy or hold securities or financial products or instruments. This information does NOT constitute financial advice or investment advice.
The market for cryptocurrency can be volatile and subject to secondary activity. Do your research thoroughly, get your own advice and don’t invest more than you can afford. Trading stocks and CFDs can be risky. CFD trading can cause losses of between 74-89% in retail investor accounts. It is important to consider all aspects of your financial situation before you make any investments. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant regulators’ websites before making any decision.