DAI is a stablecoin tethered against the price of the dollar, which helps ensure the value of this digital asset is as stable as possible. In a world of highly volatile cryptocurrencies, stablecoins like these become increasingly more desirable for users. Their benefit lies in the fact that they can actually be used as a means for payment. Imagine going into your local Starbucks where originally 1 BTC would have meant your coffee would cost you $1. Now though a coffee would cost you closer to $60,000 (that better be a great coffee!) and with unpredictable price swings, no one knows what your coffee might cost you tomorrow.
DAI works through smart contracts based on Ethereum that are automated to keep the price of the currency as close to $1 as possible. The organization tasked with handling and managing DAI is called MakerDAO. They offer a token which is fully governed by its holders (MKR), and they can vote on changes in the smart contracts so as to stabilize DAI when needed. Both DAI and MakerDAO are the first DeFI apps to have entered a state of mass adoption.
Ethereum Fees Are Now Getting Cheaper
As the amount of transactions on Ethereum grows along with the number of DeFi apps that are hosted there, so too does the cost of making a transaction. The costs are sometimes just not feasible, with some users reporting costs per transaction of up to $1000, and certainly more frequently in the hundreds of dollar range.
For this reason, many developers have switched over to Layer 2 chains, which can interact with the Ethereum Virtual Machine, but still ensure faster transaction times with much lower cost implications.
What Is rDAI?
The DAI community is huge with over 76 million Dai in circulation, and nearing an all-time high, and these users would like to continue using this stable alternative to cryptocurrencies. The rDAI, or redeemable DAI is an excellent option for them as it is always pegged to the DAI, yet sits on the RSK network rather than Ethereum. As such transaction fees are a mere slither of the cost of transacting when compared to transactions on the Ethereum network, sometimes up to 100 times cheaper. rDai is approximately 0.15c per transaction now, which calculates at 80 times cheaper than transferring DAI itself over Ethereum.
rDai takes this one step further. It allows users to invest in a pool for collateralized loans, and to gain yield on their holdings. In this way, users will always have the same amount of DAI as they did when they first entered it into the pool
rDai is an ERC20 token, meaning any transaction made can be conducted through any wallet of the user’s choice. Users will interact with an app like RSK to enact specific processes. rDAI is a fungible token, which means you can send any amount to any wallet and they can always withdraw it at a ratio of 1:1 for DAI. The rDai you commit to the pool can generate interest, or you can choose to send it to a community fund, a good cause, like a charity or to another decentralized app (dApp).
What Is RSK?
RSK is a smart contract blockchain, which is secured by the Bitcoin Network. While it is a Bitcoin sidechain. It is nevertheless interoperable with the EVM and so it can support smart contracts, even the same exact ones used by Ethereum.
According to RSK, their objective is to “construct a fully decentralized internet to enable Decentralized Sharing Economies in order to empower and protect the value of individuals through identity, payments, storage, communications, gateways services and the marketplace”.
As Ethereum Network gets busier with more traffic, more dApps and more transactions RSK is a good option for crypto fans who trade or hold DAI.
