Currently, many investors are planning to invest in DAI, this three-year-old crypto has caught the attention of many people who are impressed with its potential.
This useful stable coin ensures a superior cryptocurrency system with US dollar linkage, reduced volatility, and several DeFi features.
The intelligently crafted crypto holds its value over a long time and can be used as a hedge against market volatility.
Is DAI a Good Investment?
Dai (DAI) is a useful stablecoin tied to the most successful currency of the world, the US dollar.
It sure has a lot of bigger competitors such as Tether (USDT), USD Coin (USDC), and Binance USD (BUSD).
Dai can be easily purchased from several cryptocurrency exchanges.
Its value is maintained and regulated by MakerDAO. DAI can be bought using several cryptocurrencies as collateral or fiat money. To know whether you can invest in it or not, understand Dia first.
It is a decentralized stable coin with a 1:1 value ratio. This equates to $1 for each Dai.
For Dia’s price stability, smart contracts are used that execute themselves when the requirements are met.
Being a stable coin, Dia has minimized volatility and gives you the advantages of safer transactions, instant transfers, and speedy settlements.
This stablecoin is produced through the Maker Protocol platform. The DAI creator Rune Christensen is credited for developing this system.
Using this system, DIA can be produced with a range of cryptocurrencies as collateral.
Accepted cryptocurrencies include Ethereum (ETH), Compound (COMP), USD Coin (USDC), and Basic Attention Token (BAT).
It is good to invest in Dai because of its stable nature, Dai can not be seized by any entity, therefore, safer than many centralized stable coins.
It ensures liquidity as Dai is backed by the widely known fiat currency.
First launched on December 27, 2017, Dai has maintained its buying power and held its value at $1 with about a 5% margin of error on either side.
Should You Buy DAI?
It comes with a lot of benefits, a couple of them being secure transactional benefits and lower fees.
There is hardly any volatility due to its linkage to the US dollar currency. This ERC-20 token is backed by USD Coin (62%) and Ethereum (ETH) (29%).
Some of the benefits of investing in Dai are as follows.
- ERC20 – Ethereum Request for Comment (ERC) ensures easy transferability, transparency, and security. It allows storage in personal hardware wallets for maintaining ownership.
- Secure – This one of the most private and secure stable coins allows safer transactions without account creations or KYE processes. Frequent audits, two-factor authentication, and some other safety measures improve the security of DAI.
- Money Transfers – If you want to pay some loan or transfer money using crypto, Dai is your best bet. For instance, transferring $100 worth of Bitcoin will likely be valued at $95 or $100, however, transferring $100 worth of Dai would equate to $100.
- Decentralized System – DAI’s decentralized design allows freedom and unrestricted access to the funds. The transparent system requires no intermediaries, approvals, or credit checks.
Risks of Buying DAI
Pegged to One Currency – Dai has a lot of potentials but is pegged to only one currency, the US dollar. A smart investment would be a Bancor-type altcoin backed by renowned currencies like US Dollar, Pound, and Euro.
Liquidity – It is not listed on many exchanges, only a few major ones. Unlike many popular centralized stable coins like USDT and USDC, DAI does not have many trading pairs.
Investment in cryptocurrencies is the need of the hour given the huge returns. This Dai has great potential to be translated to useful solutions, however, there are a few drawbacks involved in investing in this cryptocurrency.