How to Buy DAI
Converter Dai to US Dollar
Dai (DAI) is an Ethereum based stablecoin soft-pegged to the US dollar. This means that, unlike centralized stablecoins, Dai is not backed by a dollar reserve and backing on the Maker DAO platform is used instead.
Below we learn more about what DAI is and how to buy it.
What is Dai
DAI is an ERC-20 token whose value is pegged to the US dollar. 1 DAI is equal to $1. Since its inception, DAI has become one of the popular stablecoins in the market, especially in the decentralized finance (DeFi) space.
DAI as a project was launched in 2015. DAI tokens are issued by MakerDAO, a decentralized autonomous organization founded by Rune Christensen, a Danish entrepreneur. Any holder of Maker Tokens (MKR) has a right to participate in the decisions made by the MakerDAO and can propose changes on how the DAI stablecoin should work.
Rather than holding US dollars in a centralized reserve as backing, DAI uses the algorithm to maintain a soft peg. This algorithm creates a new DAI using smart contracts. Smart contracts generate DAI whenever an appropriate amount of Ethereum-based assets are held by the as backing protocol.
Oasis DApp MakerDAO also acts as a lending platform where anyone can deposit Ethereum-based tokens. In exchange for deposited ERC-20 tokens borrowers can receive a loan in the form of DAI tokens with a dynamic interest rate. The algorithm is designed to maintain a stable DAI price by adjusting interest rates on DAI borrowings based on market trends.
If there is too much DAI in circulation and the price starts to fall, the interest rate goes up to help borrowers repay their loans and stabilize prices. All of this happens based on decisions that are made by the algorithm of the protocol and the MakerDAO, not by a central authority like a reserve bank.
Where to buy Dai
There are several ways to buy DAI: cryptocurrency exchanges, payment systems, p2p-platforms, banks like Revolut, etc.
Many trading platforms allow you to buy cryptocurrencies by a card for fiat money (dollars, euros, etc.). In addition, you can use the p2p-platform of the exchange, which hosts offers for the sale of coins with a large selection of payment methods.
Dai Buying Instructions
Since the purchase of cryptocurrency on the exchange is the most profitable, we will consider it step by step.
Decide on the level of risk
Investing in any cryptocurrencies is a high-risk activity. To protect yourself from possible losses and not lose all your money, follow simple rules:
- Do not invest all your money in a digital asset, especially in an unfamiliar project;
- Don’t buy with the last money;
- Don’t invest money you can’t afford to lose.
Choose a crypto exchange
Cryptocurrency exchanges differ from each other in terms of trading. Therefore, when choosing a platform, the following parameters should be taken into account:
- Easy registration and verification;
- Support a sufficient number of trading pairs;
- Amount of commissions (deposit/withdrawal/trading);
- The possibility to replenish the deposit from the card;
- Presence of additional services.
In addition to these features, it is important to read user reviews. Meaningful assessments about the work of a particular service will help you better navigate and pay attention to the pros and cons of the platform.
The best crypto exchanges for buying DAI can be found below:
Register an account
The user can buy DAI on any exchange where the coin is traded. Editors’ choice is to buy DAI on the largest cryptocurrency exchange – Binance. This site is characterized by favorable conditions, a large number of trading pairs, high liquidity, advanced functionality and other advantages.
Before starting work on the exchange, a new user needs to register an account. To create an account on Binance:
- Open Binance official site;
- Click on Register in the top right corner;
- Select country of residence → Create personal account;
- Enter email address, create strong password, click Next;
- Verify email and phone number. To do this, enter the activation code which been sent to your e-mail, and then make it again with the code received on your phone.
After that, the account will be registered and you can start working with the exchange.
Top up your account
Depending on the exchange you choose, there may be different ways to fund your account. Before buying DAI on the exchange, you need to clarify in which currency pair the coin is traded, and then select the appropriate deposit method. On Binance, DAI is traded against BTC, BNB, ETH and USDT.
For example, let’s top up an account in USDT as the most common stablecoin. For this:
- Log into your personal account;
- Click Wallet → Fiat and Spot in the top right corner;
- Select USDT as a deposit coin and press Deposit;
- Select network;
- Copy address and paste it into the address field on the platform you want to withdraw from;
- Check if the money was transfered to your Binance account.
Buy Dai (DAI)
After replenishing the account, you can buy DAI. To buy DAI on the Binance spot market:
- Click Trade → Spot in your account;
- Select the trading pair USDT/DAI (there is no DAI/USDT pair and you need to sell USDT to buy DAI);
- Specify order type, for example, Market;
- Enter the amount of the USDT for selling;
- Click Sell USDT.
How to sell Dai
To exchange DAI for USDT, you need to follow the same sequence of actions, just fill out the form on the right side and click the Buy USDT button.
Where to store DAI
DAI can be stored using most ERC-20 compliant mobile and hardware wallets. However, not all wallets provide equal access to the MakerDAO ecosystem.
If your goal is frequent exchange trading and cryptocurrency transactions, you can use a reliable hot wallet that is ERC-20 compliant, for example Exodus Wallet. When placing funds in “hot” wallets, you need to remember about additional security measures: enable two-factor authentication, store wallet recovery password in a safe place, etc.
If you want to be able to generate DAI by depositing Ethereum-based assets into the MakerDAO Oasis DApp, you can use a wallet with direct Oasis DApp integration like:
- MetaMask: Popular mobile app and browser wallet extension. MetaMask is handy for managing all ERC-20 tokens, including DAI. Since it offers direct integration with Oasis, you can deposit from your DApp wallet and then instantly receive DAI to your MetaMask wallet;
- MyEtherWallet: one of MetaMask’s main competitors. It is a free software wallet that you can use as a mobile app or browser extension. MyEtherWallet can be quickly and easily connected to DApps like Oasis.
The Oasis DApp also allows you to connect a hardware or software wallet using Wallet Connect. Other popular software wallets can be used with WalletConnect such as Atomic Wallet and Trust Wallet to get all the benefits of Oasis and other similar DApps.
The Oasis DApp has direct integration with Ledger and Trezor devices, so you can access MakerDAO ecosystem from your hardware wallet.
How to withdraw Dai to my wallet?
Let’s see how to withdraw DAI cryptocurrency from the Binance exchange to Exodus wallet:
- Enter your Binance account;
- Select Wallet → Fiat and Spot;
- Select the coin DAI and press Withdraw;
- Specify the network for transfer, for example, ETH (make sure that the networks on the exchange and in the receiving wallet are matching);
- Copy wallet address to transfer DAI. To do this, open a crypto wallet where coins will be withdrawn, for example, Exodus;
- Select DAI in wallet;
- Click the Receive tab. The system will display address and QR-code;
- Copy this address and paste it in the line Address in the withdrawal form on the exchange (or scan the QR-code) → confirm the transaction;
- Check if there is a cryptocurrency in the wallet.
- Select exchange;
- Register account;
- Top up your account;
- Open terminal and select DAI currency pair;
- Set order type, e.g. Market;
- Fill in order details and make an exchange.
Another way to use Dai is staking, which involves receiving a reward in exchange for staked cryptocurrency. You can stake Dai with MakerDAO through the Oasis app. There are also several crypto exchanges that offer Dai staking.
In any case, the decision to buy DAI should be considered, as all investments in any cryptocurrencies are risky.