It was created to decrease volatility and restore trust in cryptocurrency. Smart contracts play a crucial role in maintaining its value on the Ethereum blockchain. This keeps traders’ faith in cryptocurrency trading intact. On the other hand, central authorities manage the US Dollar to prevent fluctuations in price, ensuring stability for its users.

What is DAI?

DAI is inherently decentralized and collateral-backed, making it more secure and transparent between transactions. The currency is quickly gaining the trust of users because it does not carry credit risk like centralized currencies. 

It is an open-source currency, and MKR tokens and DAI are distinct tokens used for transactions. Its main aim is to solve the problem of cryptocurrency volatility. A central authority monitors it to ensure price stability.

Why would someone use DAI to take out a loan when they could simply go to a bank? This is where DAI crypto comes into play. It replaces third-party interference with smart contracts when taking out loans. Furthermore, the interest rates are lower for borrowers. On the lender’s side, there are no third parties to take a cut from the interest amount.

Thus, it is clear that using DAI for loans benefits everyone involved. The repayment rate for the loan can be mutually agreed upon.

Pros and Cons of DAI

DAI cryptocurrency has its advantages and disadvantages. One of the main issues is that it may stop working 4-5 years down the line. It is destroyed once the loan is fully repaid to the lender. DAI is primarily used for loans.

However, DAI has become quite popular, especially in the crypto sphere, because it maintains currency stability and value.

One of the major advantages of using DAI is the transactional benefits it provides. There is minimal or no volatility due to its soft association with the US Dollar, which keeps the currency’s value at $1. Currently, DAI’s price is 80

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