- In recent days during the stablecoin crisis, DAI was one of the best performers even placing above the leading stablecoin Tether (USDT).
- After losing $1 billion, on May 11, DAI’s market capitalization started to recover remarkably.
- DAI is only managed by the Maker protocol, which uses smart contracts to maintain its 1:1 parity.
What happened with Terra continues and will continue to be heard in the crypto ecosystem for a long time. The total collapse of one of the most important blockchains in the market still shocks the millions of users who do not understand how their funds disappeared in a matter of hours.
The loss of the peg of the algorithmic stablecoin, TerraUSD (UST), was the main reason for the collapse of the entire system. The theory was that it would always maintain a 1:1 parity with the US dollar, however, it currently hovers below $0.07.
The fall of this stablecoin affected the market, however, the main ones in the market managed to overcome and one that responded very well in the midst of this catastrophe was DAI.
Dai performs well
The stablecoin, which has a market capitalization close to $6.5 billion and ranks 15th in the ranking of the most valuable cryptocurrencies in the market, it was one of the best performers in these difficult days, ahead of Tether (USDT), which dominates the category.
After losing $1 billion dollars, on May 11, DAI’s market capitalization began to recover in a remarkable way reaching its highest point on May 20 reaching $6.6 billion dollars, although still far from the $7.3 he had before the market crash
The growth of decentralized stablecoins
DAI’s performance invites you to think, beyond the fact that it is not the main stablecoin, if it is the asset of the category to beat. Its popularity grows as well as its conception as a decentralized stablecoin.
Unlike the leading stablecoins, USDC and USDT, which are managed and controlled by centralized institutions within a world aiming for decentralization, DAI is only managed by the Maker protocol, which uses smart contracts to maintain its 1:1 parity. It is backed by USDC, Bitcoin, and Ethereum, among other cryptocurrencies.
DAI has similarities to UST in being algorithmic in nature but, like USDC and USDT, it is collateralized. To mint a dollar, DAI establishes that 1.7 must be deposited in another currency, such as ETH. This will prevent any kind of liquidation and the peg from breaking.
“Despite its stable mechanism and ability to thrive throughout the period of volatility, it has yet to emerge as a top choice for many investors.”, reflects Bitcoinist.
What happened with Terra left fear and a very large void within the crypto ecosystem, but DAI has become a good alternative for those who do not want to lend themselves to the volatility of crypto assets.
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