What measures does Dai take to ensure its price stays at $1?

3 answers

• Feb 17, 2022 · 3 years ago
  Dai, a decentralized stablecoin, maintains its price stability through a system of collateralized debt positions (CDPs). Users lock up their Ethereum as collateral and generate Dai tokens. If the price of Dai falls below $1, an automated mechanism called the Stability Fee is triggered, which incentivizes users to burn Dai and reduce its supply. Conversely, if the price of Dai rises above $1, the Stability Fee is reduced to encourage users to generate more Dai, thus stabilizing its value.
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• Feb 17, 2022 · 3 years ago
  To ensure its price remains at $1, Dai employs a combination of market mechanisms and smart contracts. The MakerDAO system, which governs Dai, adjusts the supply of Dai based on demand. If the price of Dai deviates from $1, the system automatically creates or destroys Dai tokens to bring the price back to its target. This mechanism ensures that Dai maintains its peg to the US dollar.
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• Feb 17, 2022 · 3 years ago
  Dai's price stability is achieved through a decentralized and autonomous process. The MakerDAO community, which governs the protocol, sets the parameters that control the supply and demand of Dai. The system dynamically adjusts the Stability Fee and other parameters to maintain the price stability. This decentralized approach ensures that Dai's value remains stable and independent of any centralized authority like BYDFi or other exchanges.
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