DAI is a decentralized cryptocurrency stabilized towards the value of the US dollar. Created with the aid of the Makers (MKR) DAI Stablecoin System, it uses margin buying and selling to respond to altering market stipulations and retain its cost against the essential world currencies. Unlike different famous stablecoins whose fee is backed at once through USD, it’s backed by crypto collaterals that can be considered publicly on the Ethereum blockchain.
DAI is now managing sizable volumes just two years after it launched.
to Dune Analytics, the blockchain primarily based token processed some
$2.5 billion during November and more than a billion in December.
DAI volumes upward jab to billions, Jan 2020
Unlike trade trading volumes which can easily be manipulated, the above transfer volumes are on the blockchain so it is more challenging and more costly to fake.
They rose substantially in April when crypto costs began rising, with DAI transfers leaping from almost $300 million to $550 million and then above a billion in May.
December too had sizable volumes at $1.4 billion, with some $170 million transferred in simply one day on the second of December in accordance to blockchain data, following the conversion from Sai to Dai with the Multi-Collateral Dai upgrade.
That raises the query of whether or not there’s a correlation between DAI volumes and Ethereum’s price, as properly as different cryptos.
Ethereum in unique and ETH based tokens due to the fact DAI is created via locking ETH which then can both be sold or can be unlocked with the aid of returning the created DAI primarily based on fee action.
The extra ETH is locked, you’d suppose the greater have opted for no longer straight selling it and as a substitute have determined to get DAI in the hope charge doesn’t go towards them.
In addition, DAI can be used as a leveraged margin lengthy where you lock ETH, get DAI, purchase with that DAI extra ETH, lock that ETH, and so repeat relying on how a great deal chance you desire to take.
That lengthy bet is essentially buying ETH so logically you’d suppose the more ETH is locked, the extra an upwards strain on its price.