Dai Coin - DAI
Dai (or DAI, formerly Sai or SAI) is a stablecoin cryptocurrency on the Ethereum blockchain which aims to keep its value as close to one United States dollar (USD) as possible through a system of smart contracts and the decentralized participants which those contracts incentivize to perform maintenance and governance functions. Dai is maintained and regulated by MakerDAO, a decentralized autonomous organization (DAO) composed of the owners of its governance token, MKR, who may vote on changes to certain parameters in its smart contracts in order to ensure the stability of Dai. Together, Dai and MakerDAO are considered the first examples of decentralized finance to receive significant adoption.
Consequently by repaying a loan and its accrued interest, the returned Dai is automatically destroyed and the collateral is made available for withdrawal. In this way the USD value of Dai can be said to be backed by the USD value of the underlying collateral held by MakerDAO's smart contracts. By controlling the types of accepted collateral, minimum collateralization ratios, and the interest rates for borrowing or storing Dai, MakerDAO is able to control the amount of Dai in circulation, and thus its value.
The power to propose and implement changes to such variables is granted, through code, to holders of the MKR token. Owners of the governance token are able to vote on proposed modifications in equal proportion to the amount of tokens they hold. The MKR token also serves as an investment in the MakerDAO system. Added interest that borrowers pay back, on top of their loan's principal, is used to buy up MKR tokens from the market and burn them (i.e. destroy, permanently take out of circulation). This mechanism aims to make MKR deflationary in correlation to the revenues from lending Dai.