Blockchain Investor Analysis

DAI

DAI
Current Price $1.01 (-1.94%)
Dai (DAI) is an algorithmic, decentralized, crypto-backed stablecoin that aims to hold parity to the US dollar that is managed by the MakerDAO project.

Our Rating:

Market

Problem that it solves

DAI solves the problem of the need for a stable digital currency but without the downside of centralization.

Customers

Anyone looking to use a dollar-pegged, blockchain-powered digital currency can use Dai. Currently, Dai is mainly used by digital asset traders and users of decentralized finance (DeFi) applications on the Ethereum blockchain.

Value creation

Price stability is something that has been missing in the digital currency market for a long time. With DAI, anyone can hold funds or transact in a stable, dollar-pegged digital currency. In addition, DAI is a relatively decentralized alternative to centralized stablecoins, such as Tether or USD Coin.

Market structure

Currently, DAI is being used mainly by traders and DeFi users. However, businesses and merchants could also adopt this coin in the future.

Market size

The potential market for DAI is impressive because it is a useable, decentralized stablecoin.

Regulatory risks

DAI could easily attract the wrong kind of attention from regulators as it provides a decentralized, crypto-backed alternative to centralized, regulated stablecoin offerings.

Average Market Score

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Competitive Advantage

Technology/blockchain platform

DAI operates on the tried-and-tested Ethereum blockchain.

Lead time advantage

DAI's lead time advantage was relatively small in the stablecoin market. However, it is clearly number one among decentralized, algorithmic stablecoins. Hence, it has consistently remained near the front of the pack of stablecoins.

Contacts and networks

MakerDAO's Rune Christensen is well-connected in the industry and has access to a wide range of industry players.

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Management Team

Entrepreneurial Team

DAI is fueled by MakerDAO, which is 'managed' by Rune Christensen. Under Rune's watch, DAI has flourished.

Industry/technical experience

The team has more than enough experience in the industry, but most of their credentials stem from DAI.

Integrity

Mr. Christensen comes across as transparent and honest. He has publicly expressed his desire to distance himself from the management of the project and aims to decentralized the MakerDAO entirely.

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Token Mechanics

Token required

The DAI token is necessary in order for it to be transferrable in the market.

Value added

DAI's token adds new value in the stablecoin market because of its decentralized aspect. However, you could argue that users who want to hold a dollar-pegged stablecoin could just use a more established, centralized competitor.

Decentralized

DAI is fairly well decentralized, but the interest rate is controlled by its voters. When the value fluctuates in response to market conditions, it feels a lot like a centralized asset.

Token supply

The token supply is flexible, but it has to be in order to maintain solvency as a pegged asset.

Public exchange

DAI is available on many leading exchanges.

MVP

DAI has been up and running since 2017.

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User Adoption

Technical difficulty

As an algorithmic, crypto-backed stable digital currency, DAI is substantially more difficult to understand than its centralized counterparts.

Halo Effect

DAI's halo effect stems predominantly from its strong association with Ethereum.

Buzz

People are talking about DAI, and social media follows the decisions of the MakerDAO community closely. Especially the Ethereum community.

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Overall Score

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Blockchain Investor Analysis

DAI stands out as the first functioning algorithmic, crypto-backed stablecoin that is pegged to the US value of the US dollar. Despite the ups and down of MakerDAO, DAI benefits from lead time advantage and strong community-backing.

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