DAI is an ERC-20 stablecoin token with a fixed price of $1.
Through the Maker platform, it can be "loaned" by smart contracts called “collateralized debt position”, using Ethereum (ETH) as collaterals. The contracts lock a volume of ETH as a collateral and grant DAI proportionally, charging a small fee in MKR (which is burned). The collateralized ETH can be fully retrieved once the DAI loan is paid.
Unlike other stablecoins, DAI isn't backed by a physical asset, but by ETH. In doingShow more [+]