DAI is a stablecoin which serves many key purposes in the blockchain space. Unlike many stablecoins, DAI is not backed by fiat currency. It is backed by Ether instead of actual US dollars. Processes exist to make sure that DAI can maintain stability and mirror the dollar.
On MakerDao's website, DAI is described as a digital currency that can be used by anyone, anywhere, and anytime. It is a stable, decentralized currency that does not discriminate. Businesses and individuals around the world can use DAI to experience the benefits of digital money.
DAI has set the foundations for different protocols in the blockchain space. Across the world, various blockchain projects rely on DAI because of how it empowers users to separate themselves from local financial systems and, thus, reap the benefits of a decentralized ecosystem.
Initially, DAI was launched for only one collateral, known as pooled Ether (PETH). Users would be able to deposit ETH in return for an equivalent amount of PETH, which they would use for a collateralized debt position (CDP). If the market for ETH crashed, more collateral than debt would be retained. The supply of PETH would be decreased, which would increase relative demand and, consequently, the price of DAI. As a result, the value of the collateral in the CDP would increase while the overall value of the debt decreased.
On Gitcoin, DAI is used as a reward for its MINI CLR Rounds and as a reward for the completion of some bounties. After CLR Rounds, DAI may be distributed to participants on the leaderboard who have made contributions that fall within the guidelines of the MINI CLR. Users may also earn DAI from completed bounties.
Your DAI can be used in several ways. There are many decentralized platforms that accept DAI. Among its most popular use cases in the blockchain space is to buy more cryptocurrency, protect against a fall in the price of ETH, or make votes on key decisions in the blockchain sector.