Dai is one of the decentralized stable cryptocurrencies. In this article we will explain is dai mining profitable and what is the future of Dai and Dai mining.
DAI is an ERC-20 token that seeks to maintain a fixed 1: 1 value in US dollars by locking other encrypted assets into smart contracts. Unlike other stablecoins issued and controlled by a central authority, the DAI is the native of the Maker Protocol – a decentralized stand-alone ecosystem of smart contracts running on the Ethereum blockchain. Collateral loans provide a way for the lender to secure their loan by locking in their assets.
Traditionally, these loans have lower interest rates than unsecured loans due to the fact that locked assets can cashed in to repay some of the loans.
How does Dai work?
DAI exists as a key component in the concept of CDPs (collateral debt positions). CDPs are smart contract Maker protocols that allow users to lock their collateral assets (ETH, BAT, etc.) and create DAI. A good way to imagine CDPs are safe vaults. They will use to lock collateral while being able to receive liquid and stable crypto-cash. Due to the volatile nature of collateralized assets, DAI often pledges to prevent over-liquidation.
For example, users must deposit $ 200 ETH to unlock the $ 100 DAI, which provides some sort of volatile buffer. That way, if the price of ETH drops by 25 percent, that $ 100 DAI loan will still be covered with $ 150 ETH. So to recover their collateralized assets, the user must repay the DAI, which was borrowed at an additional cost.
Who are the founders of Dai?
The DAI was founded in 2014 by developer Rune Christensen. The Maker Protocol is an open-source project created as a decentralized response to the Stablecoin controversial protocols of the time.
In 2017, DAI was officially launched on the Maker protocol. Designed as a means of providing, stable and secure lending assets to businesses and individuals. DAI can do all this without losing decentralization.
Since the launch of the Maker Protocol, the Maker Foundation has delegated all of its authority over the platform to MakerDAO, a decentralized, independent organization that currently manages the entire Maker Protocol.
How does Dai Mining work?
Dai mining is not possible like most cryptocurrencies. Unlike Bitcoin – the supply of Dai will not predetermine or limit, which is part of how coins are able to be stable.
To increase supply, instead of multiplying new blocks, Dai created when a person uses collateral to borrow from the community or MakerDAO. On the contrary, by repaying these loans, Dai disappears. This is why Dai mining will not do like other cryptocurrencies. This constant churn, always in demand, ensures that there is never more than what is needed in the ecosystem, so the currency can maintain its value.
In principle, loans could only be obtained through ETH, the Ethereum digital token. Hence the title “Single-Collateral Dai”. Users retain their original Dai ETH when connecting to the ecosystem. This is only locked using smart contracts and the value of ETH creates a loan of equal value in Dai. The initial ETH is locked until the user repays the entire loan owed by Dai plus interest. Once the loan is fully repaid, the user can cash in their ETH capital or make other transactions in the Ethereum ecosystem.
In 2019, the second cryptocurrency for collateral was approved, called BAT, which turned it into a “Multiple-Collateral Dai”. In March 2020, the cryptocurrency market fluctuated sharply – and Dai was no different. Many accounts were not secured and the system was reinvested through debt auctions, where MKR tokens for Dai were auctioned off. To boost liquidity in the system, MKR holders voted to designate a handful of encrypted assets as acceptable collateral, meaning they are shared. With ETH in its capacity to generate loans and create more Dai. From May 2020, four cryptocurrencies – ETH, BAT, USDC, and WBTC – can be used as loan collateral to generate Dai.
Dai mining: Total Dai Supply
As of July 21, 2021, approximately $ 5.48 billion in Dai is in circulation. This number fluctuates depending on overdue loans created using Ethereum and other approved digital currency assets to finance the ecosystem.
What makes Dai unique?
DAI is one of the new types of cryptocurrencies – StableCoin. The strength of stablecoins, as you may have guessed from their name, varies in their ability to deliver lasting value in the market.
Maintaining price stability will mostly do through the use of large, centralized units. However, the Maker Protocol operates DAI in a completely decentralized manner. even leaving governance of the protocol up to a distributed network of users developing the MakerDAO.
In order for autonomous processes to work properly, the Maker protocol needs to provide real-time information to the system at all times and to ensure that automated CDPs are properly secured at all times.
What Gives Dai and Dai mining Value?
The supply of DAI is entirely on-demand. When a user deposits an ETH or any other supported ERC20 to the Market platform for collateral, a DAI is created and the user is eventually credited with a 66% collateral ratio, which results in Increases in the total supply of DAI. The value of DAI and Dai mining comes mainly from here.
How many Dai tokens are in circulation?
The current supply of DAI is 5,405,586,556. Unlike centralized stablecoins – which are made by a private company according to their publishing policy – new DAI tokens can be multiplied by each user using the CDP function of the Maker protocol.
Maker runs on the Ethereum Blockchain and is the software that controls the supply of DAI. In order to maintain its price stability against the US dollar, the Maker Protocol is a hard code to ensure every DAI token in existence will collateralize by the proper amount of other cryptocurrencies.
There is no limit to the total supply of DAI – supply is constantly changing, depending on the amount of collateral stored on each CDP on the network at any given moment.
Other technical information
To help keep the system as secure as possible – and to help reduce the risk of potentially catastrophic accidents – Maker developers include a feature called the emergency shutdown process.
The emergency shutdown process may initiate by a group of trusted individuals who hold the keys to the global settlement. Each of these signatories must approve the action to start the process.
If this process is enabled, the entire Maker protocol will be frozen. DAI holders can exchange it for their original collateral assets before the entire protocol expires.
How is Dai Network Safe?
DAI is an Ethereum-based ERC-20 token, meaning that the Ethereum Ethash Algorithm secures it. DAI follows the rules set by MakerDAO. MakerDAO is a decentralized, independent organization of international participants that is fully responsible for managing the entire Maker Protocol (and subsequently DAI).
Ethereum Ethash Algorithm
How to use Dai
In addition to being a secure and stable payment method, DAI offers cryptocurrency traders a powerful tool to minimize their risk. During periods of extreme volatility that have become somewhat synonymous with the large cryptocurrency market, users may park part or all of their funds in the DAI to reduce losses.
DAI also allows users to access collateral loans in a way that offers many advantages over the available options. So without the need for creditor approval, DAI users can lock their digital assets as collateral and receive DAI, which they can use to buy anything (even most cryptocurrencies).
How to choose a Dai wallet
The type of Dai (DAI) e-wallet you choose will most likely depend on why you want to use it and how much you need to save. Hardware wallets or cold wallets offer the most secure option with offline storage and backup. Both Ledger and Trezor hardware wallets offer storage solutions for DAI. Hardware wallets are a more expensive option. As such, they may be suitable for more experienced users to store larger amounts of DAI.
Software wallets offer another option and are free and easy to use. They are available for download as smartphone or desktop applications and can be secure. Using secure wallets, private keys will manage and back up by your service provider. Offline wallets use secure elements on your device to store private keys. Although they are convenient, they are less secure than hardware wallets and may be more suitable for novice users who tend to keep smaller amounts of Dai.
Online wallets or web wallets will also be free and easy to use and access from multiple devices using a web browser. They are hot wallets and can be less secure than hardware or software wallets. Because you trust your DAI management platform, you should choose a reputable service with a history of security and protection. Therefore, they are suitable for holding smaller amounts.
Kriptomat offers a secure storage solution that allows you to easily store and trade your Dai (DAI) tokens. Storing your DAI with Kriptomat provides you with organizational security and user-friendly performance.
Selling and buying DAI or exchanging them with any other cryptocurrency will do only in the moments when you choose their secure platform as your storage solution.
Dai (DAI) Governance
DAI, as the native stable token of the Maker Protocol, governed by holders of Maker (MKR). The Dai / Maker is managed through its MakerDAO system, in on-chain and off-chain. Holders of MKR tokens vote on proposals using the constituent protocol chain governance system.
Also, this system has two different types of voting: government polls and executive votes. Any MKR token holder can participate in these polls to help the future of the protocol. MKR stakeholders can also vote outside the chain by partnering with the community in places such as forums. Below we have collected the most reliable Dai (DAI) price forecasts from popular forecasting platforms.
Dai price chart
Dai price forecast
No. 1 WalletInvestor DAI Price Forecast for 2021, 2023, 2025
According to WalletInvestor, the Dai price drops from $ 1.001 to $ 0.992 a year. This makes DAI a bad investment. Long-term income potential is -0.90.
No. 2 TradingBeasts DAI price forecast for 2022
In response to a question about whether Dai is a good investment, TradingBeasts says a resounding yes. In 2021, the coin price will expect to reach $ 1.2825151, rising to $ 1.2916132 by the end of 2022.
No. 3 DigitalCoin DAI price forecast for 2021, 2022, 2023, 2025
In DigitalCoin analysis, the price of Dai cryptocurrency will increase from $ 1.28565 in the next 5 years to $ 5.0455162. It will reach $ 2.1855359 by 2022 and will continue to grow in 2023-2024. According to this forecast, Dai is a profitable long-term investment.
Dai price prediction
The future of Dai mining
MakerDAO is working hard to name DAI as “the world’s first neutral currency”. Also, It wants to start with the logo, which wants to be as ubiquitous as the dollar, euro, and pound symbols. This could bring a bright future for Dai mining through cloud mining with a cloud miner center such as the Minerland website.
In an effort to become the first unreliable common currency, people must accept the DAI. Also, it must use by millions – a task that requires not only branding but also marketing and training. Although it is not an easy task, no other stable coin has a better opportunity to achieve it.