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History of DAI


Dai is a decentralized, cryptocurrency stablecoin that is designed to maintain a consistent value close to $1. Dai is the first stablecoin that operates on the Ethereum blockchain and is often considered the backbone of the decentralized finance (DeFi) ecosystem on Ethereum. In this article, we will delve into the history of Dai, from its inception to its current status as a leading stablecoin.

The Birth of Dai: MakerDAO

Dai was created in 2015 by a group of developers and engineers who saw the potential of stablecoins in the cryptocurrency market. The team was led by Rune Christensen, who founded the company MakerDAO. MakerDAO aimed to create a decentralized platform for stablecoin issuance that could provide users with an alternative to traditional stablecoins, which are often issued by central authorities.

MakerDAO’s initial vision was to create a decentralized autonomous organization (DAO) that could issue Dai, a stablecoin backed by a basket of cryptocurrencies. The goal was to create a stablecoin that would not be subject to the same level of price volatility as other cryptocurrencies and that could be used as a means of payment in the cryptocurrency market.

The Launch of Dai

Dai was launched in December 2017 as a single-collateral stablecoin, backed by Ether (ETH), the native cryptocurrency of the Ethereum blockchain. The idea was to create a stablecoin that would be backed by Ether, which would provide stability and reduce the price volatility of the token.

Dai’s launch was a major milestone for the cryptocurrency market, as it marked the first time that a decentralized stablecoin had been launched on a blockchain. The launch of Dai was quickly followed by the launch of other stablecoins, such as USDC, Tether (USDT), and others. However, Dai has remained one of the most popular stablecoins in the market, with a large and growing user base.

The Evolution of Dai

Since its launch, Dai has undergone several major upgrades and changes. In 2019, MakerDAO launched Multi-Collateral Dai (MCD), which allowed for the issuance of Dai backed by a variety of cryptocurrencies, not just Ether. This upgrade allowed for greater flexibility and stability, as the price of Dai would no longer be tied to the price of a single cryptocurrency.

In 2020, MakerDAO faced significant challenges due to the economic impact of the COVID-19 pandemic. The price of Ether, the main collateral for Dai, fell significantly, which put pressure on the stability of Dai. To address these challenges, MakerDAO implemented several measures to ensure the stability of Dai, including increasing the stability fee and reducing the maximum amount of Dai that could be generated per unit of collateral.

Despite these challenges, Dai has remained one of the most popular stablecoins in the market, and its popularity has only continued to grow. As of February 2023, Dai has a market capitalization of over $5 billion and is one of the most widely used stablecoins in the DeFi ecosystem.

The Future of Dai

As the cryptocurrency market continues to grow and evolve, it is likely that Dai will play an even greater role in the DeFi ecosystem. The popularity of decentralized finance has grown significantly in recent years, and Dai is poised to be one of the leading stablecoins in the market.

In the future, it is likely that Dai will continue to evolve and expand, offering new and innovative solutions to the challenges faced by the cryptocurrency market. With its decentralized nature and commitment to stability, Dai has the potential to become a leading currency in the DeFi ecosystem and beyond.

Despite its success, Dai has also faced its fair share of challenges. In March 2020, Dai experienced a flash crash, causing its value to drop significantly. This was due to the sudden drop in the value of the underlying collateral assets, primarily ETH, as a result of the economic turmoil caused by the COVID-19 pandemic. This event highlighted the importance of having a strong and diversified collateral portfolio, as well as the need for decentralized governance mechanisms to make decisions on how to respond to such events.

In response to this, the MakerDAO community voted to implement a system of collateral auctions, which would allow the Maker protocol to sell off the collateral assets in order to stabilize the Dai price. This system has since been used successfully to maintain Dai’s stability.

Another challenge that Dai has faced is the increasing competition from other stablecoins. In recent years, the stablecoin market has grown rapidly, with many new projects entering the market. However, Dai remains a popular choice for many users due to its decentralized nature and the transparency of its underlying collateral assets.


In conclusion, Dai has played a major role in the growth and development of decentralized finance. It has demonstrated the viability of using decentralized protocols to create stable digital assets, and has paved the way for other projects to build upon this concept. As DeFi continues to grow and mature, it will be interesting to see the future developments in the Dai project and its continued impact on the industry.