Cash out on MakerDAO’s Dai
In this article we briefly examine what Dai is, why it is picking up in popularity and how anyone can buy or sell Dai with cash. If you’re in a rush and just want the tl;dr version here are the main takeaways:
- Dai is different from other stablecoins in a few key aspects.
- You can earn interest with Dai, among other use cases.
- Buying and selling Dai for cash is now available at all LoCoins locations.
Introduction to Dai
In recent times a lot of attention has been given to so-called stablecoins in order to address difficulties presented by the price volatility of most cryptocurrencies. Dai (DAI) is a decentralized cryptocurrency, stabilized against the value of USD.
MakerDAO, the foundation behind Dai, built it on the Ethereum blockchain and added a set of unique features that together make it one of the most promising stablecoins currently available. Through the use of a smart contract mechanism called Collateralized Debt Position (or CDP for short) and other processes they ensure that Dai stays tied to the US dollar. Because it’s not backed centrally, like most other stablecoins, it avoids all risks stemming from centralization.
Users can generate (borrow) Dai freely once they have deposited a certain amount of ether into a smart contract (creating a CDP) as a collateral. Deposited ether can be retrieved once the borrowed Dai amount (plus interests) has been paid back. In the meantime Dai can be used just like any other cryptocurrency (traded, used for payments and so on). The collateral is carefully managed by MakerDAO’s MKR token holders and other mechanism; it gets fairly technical at this point so head over to Maker’s page or one of the many explainer-type posts out there to learn more about how Dai works under-the-hood.
Next let’s examine how a stablecoin like Dai can be used.
While one of the more popular applications so far has been borrowing Dai to buy more crypto (essentially taking a loan based on your ether through the use of CDP as described above) the essential point of any stablecoin is to be used by services that rely on a stable price. This year MakerDAO has been working hard with various products and services and the result is amazing – a new exciting ecosystem of use cases all benefiting from the stable nature of Dai.
In order to participate users don’t need to go through the CDP process of generating new Dai but can simply buy it on the market (more on this below). Most existing Dai holders will be familiar with financial platforms like Compound, dYdX, LoanScan, InstaDApp, Outlet and others where they can lock their Dai into lending services and protocols to earn interest.
New cool applications are popping up all the time: RealT pays dividends on owning fractions of US real estate, SportsX offers sports betting with Dai and PoolTogether cleverly allows Dai holders to participate in free (!) lottery. Products like Zerion are building full-blown banking solutions on top of Dai and other decentralized financial services (DeFi), bringing the cryptocurrency space closer to real life use as ever before.
How to obtain Dai
If you’re using one of the popular crypto exchanges there’s a good chance you can get Dai there. It works like other tokens and the price is stable (1 DAI = 1 USD), however they don’t usually offer a direct exchange with fiat.
If you want to get Dai directly for fiat you can now do that quickly and safely through any of the LoCoins locations. All you need to do is show up at the selected location and pay with cash. You then receive Dai in a matter of few minutes to the address you’ve provided. It works in the opposite direction too, if you ever find yourself in need of some cash and want to use your Dai, you just show up at the chosen location after sending the Dai to the given address and simply pick up the agreed amount of cash.
LoCoins is a crypto<>cash service available currently in Slovenia and few other selected locations in Europe and planning to expand to new countries in 2020. Existing retail businesses can easily join the network as agents and offer a crypto<>cash exchange (including Dai) to their customers without any hardware, special knowledge or risks related to operating with crypto.
We’ve also integrated the service to ATMs and will be working with ATM operators in the coming months to bring Dai to crypto as well as traditional ATMs. Here is a sneak peak of buying Dai on a Lamassu machine by Bitnik: