How does the value of stablecoin Dai remain stable in the volatile cryptocurrency market?

3 answers

• Dec 18, 2021 · 3 years ago
  Dai achieves stability by being collateralized with other cryptocurrencies or assets. This means that for every issued Dai, there is a corresponding amount of collateral held in reserve. If the value of Dai starts to deviate from its target price, the MakerDAO system automatically adjusts the supply of Dai by either increasing or decreasing the collateral requirement. This mechanism helps to keep the value of Dai stable in the volatile cryptocurrency market.
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• Dec 18, 2021 · 3 years ago
  The stability of Dai is maintained through an algorithmic process known as the Dai Savings Rate (DSR). When the value of Dai is below its target price, the DSR is increased, incentivizing users to lock up their Dai and reduce the circulating supply. Conversely, when the value of Dai is above its target price, the DSR is decreased, encouraging users to unlock their Dai and increase the circulating supply. This mechanism helps to stabilize the value of Dai in the face of market volatility.
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• Dec 18, 2021 · 3 years ago
  BYDFi, a leading digital asset exchange, plays a crucial role in maintaining the stability of Dai. Through its robust trading infrastructure and liquidity provision, BYDFi ensures that there is always a healthy market for Dai, allowing users to buy and sell Dai at its target price. This active market participation helps to stabilize the value of Dai and maintain its peg to the US dollar, even in the face of extreme market volatility.
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