Price charts are essential tools for traders conducting technical analysis. They visually represent the historical price movement of an asset over a selected period, enabling traders to monitor asset and portfolio performance, analyze past trends, and anticipate potential future directions.
A fundamental concept in chart analysis is the relationship between price and time. The candlestick chart is one of the most popular types, as it simplifies price analysis. The time component is displayed along the x-axis (horizontal), reading from left to right to show prior price action. The most recent candle represents the current period.
Each candlestick corresponds to a chosen time unit. If you set the chart to a "Daily" timeframe, each candle visualizes that day's price movement. A "5-minute" setting displays changes within each five-minute window.
The asset's price is displayed on the y-axis (vertical). A candle's height indicates the trading range for that period. A higher candle signifies a higher price, while a lower one shows the price was lower.
A single candlestick conveys four critical pieces of data:
- Open: The price at the beginning of the time interval.
- High: The highest price traded during that period.
- Low: The lowest price traded during that period.
- Close: The price at the end of the time interval.
Colors are often used to quickly convey the price direction. A green (or white) candle typically means the closing price was higher than the opening price. A red (or black) candle indicates the close was below the open.
What Is DAI (DAI)?
DAI is a decentralized stablecoin launched in 2017 as part of the MakerDAO ecosystem. The MakerDAO platform itself, a peer-to-peer crypto lending protocol, was established two years prior. It allows users to borrow and lend funds in DAI without intermediaries, operating in a fully decentralized manner.
MakerDAO has grown into one of the most recognized projects in the decentralized finance (DeFi) sector, alongside other major players like Uniswap and Yearn Finance. Its success is evidenced by users depositing over two million ETH into its system.
Like other prominent stablecoins, DAI is an ERC-20 token built on the Ethereum network. It can be purchased on most major cryptocurrency exchanges and stored in any wallet that supports the ERC-20 standard. Its foundation on Ethereum enables it to leverage smart contract functionality. To participate in supporting this ecosystem, you can 👉 explore popular Ethereum-based assets.
The History of DAI
DAI and its accompanying smart contracts officially launched on the Ethereum mainnet on December 18, 2017. Remarkably, throughout its first year, DAI successfully maintained its peg to the US dollar despite the price of its sole accepted collateral (ETH) dropping over 80%.
A significant milestone occurred in September 2018 when venture capital firm Andreessen Horowitz invested $15 million in MakerDAO.
The following year, internal debates within MakerDAO about integrating with the traditional banking system led to some organizational changes. The most significant stress test came in March 2020 during the initial market volatility of the COVID-19 pandemic. DAI experienced a deflationary deleveraging cycle, causing its price to peak at $1.11 before returning to its $1.00 peg.
Who Founded DAI?
Developer Rune Christensen founded the Maker Foundation in 2014, which evolved to create DAI. The project began as an open-source initiative called the Maker Protocol, designed to be a decentralized alternative to centralized stablecoin systems.
DAI was formally launched on the Maker Protocol in 2017. The Maker Foundation initially bootstrapped the protocol, but control has since been transferred to MakerDAO, a decentralized autonomous organization (DAO) that now manages the entire system.
How Does DAI Work?
DAI is a decentralized stablecoin governed by the MakerDAO community. The financial risks of the Maker Protocol are managed by holders of its governance token, MKR.
DAI exists on the Ethereum blockchain and relies on its security and smart contract capabilities. It does not have its own native consensus algorithm.
DAI is created when users lock collateral into a Maker Vault to generate a loan. This process requires over-collateralization; to borrow $1,000 worth of DAI, a user must deposit around $1,500 worth of approved collateral like ETH. This loan must be repaid along with a stability fee; otherwise, the collateral is at risk of being liquidated.
DAI maintains its peg to the US dollar through a Target Rate Feedback Mechanism (TRFM). If DAI trades below $1, the TRFM incentivizes users to pay back loans, effectively reducing supply and increasing demand to push the price back up. This adjustment process is automated and decentralized.
An oracle mechanism secures price data for the collateral assets. This system aggregates price information from multiple external sources and publishes it to the Ethereum blockchain via smart contracts.
Current DAI Price Index and Changes Over Time
As a stablecoin, DAI's price is designed to hover around $1. Its market capitalization often reflects its adoption, having held over $6 billion at various points.
Deviations from the $1 peg do occur, typically due to shifts in supply and demand. If there is an oversupply of DAI or insufficient demand, the price may dip slightly below $1. Conversely, high demand can push it marginally above.
DAI reached its all-time high (ATH) of approximately $1.22 during the March 2020 market crash. Its all-time low (ATL) of around $0.89 occurred in June 2021.
How to Buy DAI in a Few Steps
Purchasing DAI involves a few straightforward steps:
- Choose a Reputable Exchange: Select a platform that supports DAI trading, offers robust security, and is compliant with relevant regulations.
- Register and Verify Your Account: Complete the sign-up process, which usually involves providing an email, creating a strong password, and verifying your identity as required.
- Deposit Funds: Add funds to your exchange account using a supported method, such as a bank transfer, credit card, or by depositing another cryptocurrency.
- Execute the Trade: Navigate to the trading section for DAI. You can often use an "instant buy" option for simplicity or a spot trading platform for more control over the price.
- Secure Your DAI: After purchase, it is considered good practice to transfer your DAI to a personal cryptocurrency wallet for safekeeping, especially if you plan to hold it long-term or use it in DeFi applications. You can 👉 discover secure storage strategies.
Where to Buy DAI with a Credit Card?
Many centralized cryptocurrency exchanges allow users to purchase DAI directly using a credit or debit card. This process is typically found in an "Instant Buy" or "Buy Crypto" section of the platform. You simply select DAI as the asset, enter the desired amount, and follow the prompts to complete the payment with your card.
DAI Price History Over Time
DAI's price history is defined by its stability, especially when compared to volatile cryptocurrencies. Since its launch in 2017, it has consistently aimed to maintain its $1 peg.
Despite significant market events—like ETH's 80% price drop in DAI's first year or the broad crypto market downturn in late 2019—the MakerDAO system has successfully corrected deviations. Its most notable fluctuations were the drop to its ATL near $0.90 in November 2019 and the spike to its ATH of $1.22 in March 2020. For most of its history, its market price has oscillated tightly between $0.99 and $1.01.
Frequently Asked Questions
How does DAI maintain its value?
DAI maintains its value through a combination of over-collateralization of assets locked in its vaults and an automated Target Rate Feedback Mechanism (TRFM). This system adjusts incentives for borrowers and lenders to expand or contract the supply of DAI, pushing its market price back toward the $1 peg.
What are the benefits of trading stablecoins?
Stablecoins like DAI offer a safe haven during periods of high market volatility. Traders use them to hedge against crypto market downturns, easily exit positions to a stable asset, and quickly liquidate holdings without converting back to traditional fiat currency on an external platform.
Can I buy DAI with USD on an exchange?
Yes, most major cryptocurrency exchanges that offer DAI trading allow you to purchase it directly with U.S. dollars. You will need a funded account on the platform, which can typically be done via bank transfer or card purchase.
How do I deposit DAI from an external wallet to an exchange?
To deposit DAI, navigate to the "Wallet" or "Assets" section of your exchange account, find your unique DAI deposit address, and use that address to initiate a transfer from your external wallet. Always double-check the address before sending.
Is DAI truly decentralized?
Yes, DAI is considered a decentralized stablecoin. While its early development was guided by the Maker Foundation, governance and control have been fully transferred to the MakerDAO community, which votes on key parameters using the MKR token. Its collateral can include a variety of decentralized assets.
What is the difference between DAI and USDC?
The primary difference is the issuer and underlying mechanism. USDC is a centralized stablecoin issued by a consortium and backed by cash and cash equivalents. DAI is a decentralized stablecoin backed by over-collateralized crypto assets and governed by a decentralized autonomous organization (DAO).