What could affect the price of DAI?
Dai’s $1 value peg faces challenges from risks tied to its backing assets, changing regulations, and competition in the stablecoin market.
- Collateral Diversification – Adding new asset types could either help stabilize or destabilize Dai
- Regulatory Changes – New stablecoin laws might affect how much people want to use Dai
- DeFi Competition – Competitors like pUSD are testing market trust in Dai
Deep Dive
1. Changes in Collateral Backing (Mixed Effects)
Overview:
Dai stays stable because it’s backed by more value than the Dai issued, using assets like Ethereum (ETH), real-world assets, and other cryptocurrencies. MakerDAO, the group behind Dai, is proposing to add new types of collateral, such as the stablecoin FRAX, to reduce reliance on ETH. But if the backing assets are too volatile, like ETH, big price drops can force forced sales (liquidations) that threaten Dai’s stability.
What this means:
Using a wider variety of assets can make the system stronger overall but also introduces new risks. For example, when ETH’s price dropped 30% in the second quarter of 2025, it caused $47 million worth of Dai liquidations (Blockworks). Adding FRAX as collateral, planned for late 2025, could reduce risk from any one asset but ties Dai’s stability to Frax’s newer, less tested technology.
2. Stablecoin Regulations (Potential Downside)
Overview:
The U.S. GENIUS Act, passed in July 2025, banned paying interest on stablecoins, which reduces the appeal of Dai’s Savings Rate (DSR) feature. At the same time, Circle’s USDC stablecoin introduced reversible transactions, and credit rating agency S&P gave MakerDAO’s governance a low B- rating, showing regulatory concerns about decentralized stablecoins.
What this means:
Centralized stablecoins like USDC now offer features that attract institutional investors, which could reduce demand for Dai among these users. After the GENIUS Act, Dai’s trading volume dropped 22% (Yahoo Finance). Still, Dai’s decentralized design keeps it popular for users who want censorship-resistant options.
3. Competition in the Stablecoin Market (Mixed Effects)
Overview:
New stablecoins like pUSD on Polkadot, launched in September 2025, mimic Dai’s early model but face doubts after the failure of Acala’s aUSD. Meanwhile, Tether controls 58% of the stablecoin market, putting pressure on smaller coins like Dai.
What this means:
Dai’s $5.36 billion market value (4th largest stablecoin) depends on staying integrated with decentralized finance (DeFi) platforms. MakerDAO’s recent rebranding to Sky Protocol and the move to USDS have divided the community, risking fragmentation. However, Dai remains a key player in lending platforms, backing about 12% of Aave’s collateral, which helps protect its position.
Conclusion
Dai’s ability to keep its $1 peg depends on balancing new collateral options with regulatory challenges and competition. While diversifying its backing assets could help, centralized stablecoins and new regulations may limit growth.
Key metric to watch: Dai’s circulating supply — if it falls below 5 billion, it could signal weakening demand; if it rises above 5.5 billion, it might indicate renewed activity in DeFi.
What are people saying about DAI?
Dai (DAI) continues to play a key role as a decentralized stablecoin, driving major trades and dominating decentralized finance (DeFi). However, competition is starting to emerge. Here’s the latest:
- Hackers are holding a lot of DAI – Over $45 million in DAI is held by hackers, sparking speculation they might be buying Ethereum (ETH).
- Institutions are moving to DAI – Wallets linked to the Ethereum Foundation are swapping ETH for DAI, likely to manage risk.
- DAI is a DeFi cornerstone – With a market cap of $3.6 billion, DAI remains a key source of liquidity in decentralized finance.
Deep Dive
1. Hacker’s DAI holdings raise concerns about market volatility
“Coinbase hacker holds $45.36M DAI across wallets, may buy more ETH”
– @OnchainLens (120K followers · 2.1M impressions · 2025-07-07 09:06 UTC)
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What this means: If hackers keep buying ETH with their DAI, it could put short-term downward pressure on ETH prices. For DAI, this activity shows its strength as a liquid asset used in large transactions, so the impact is neutral.
2. Ethereum Foundation-linked wallet swaps ETH for DAI
“Ethereum Foundation-linked wallet converts ETH to DAI at $4,578 average”
– @EthereumTracker (89K followers · 1.4M impressions · 2025-08-15 02:01 UTC)
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What this means: This move is positive for DAI, as it shows institutional players are using it to protect profits and reduce exposure to ETH price swings, reinforcing DAI’s reputation as a stable asset.
3. DAI’s decentralized governance gives it an edge over USDC
“DAI’s DAO governance and $140B DeFi TVL make it a ‘hedge against centralized stablecoin risks’”
– The Motley Fool (15M monthly readers · 2025-07-26 10:05 UTC)
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What this means: With increasing regulatory pressure on centralized stablecoins like USDC and Tether, DAI’s decentralized structure makes it a strong long-term option for users seeking stability without central control.
Conclusion
The outlook on DAI is mixed. It’s praised for its decentralization and important role in DeFi, but concerns remain due to hacker activity and growing competition from new stablecoins like Sky Protocol’s USDS. Keep an eye on DAI’s market cap—if it stays above $4 billion despite new competitors, it shows strong trust in its model. The question remains: can DAI, the original DeFi stablecoin, continue to outpace regulators and challengers?
What is the latest news about DAI?
Dai is navigating challenges in the crypto space as competitors innovate and security breaches test its strength. Here’s the latest:
- Radiant Capital Hacker Converts $6.8M to DAI (Sept 28, 2025) – An attacker used DAI to launder stolen funds, highlighting risks tied to stablecoin liquidity.
- Circle Considers Reversible Transactions (Sept 25, 2025) – A possible regulatory change that could impact stablecoins like DAI.
- Polkadot Launches pUSD, Drawing Comparisons to DAI (Sept 29, 2025) – The new stablecoin raises familiar questions about collateral backing.
In-Depth Look
1. Radiant Capital Hacker Converts $6.8M to DAI (Sept 28, 2025)
What happened:
A hacker exploited Radiant Capital, converting about 14 million DAI into Ethereum (ETH) and then moving $6.8 million through TornadoCash, a service that obscures transaction history. This shows that while DAI has strong liquidity, it can also be used to move stolen funds across blockchains.
Why it matters:
This event is neutral for DAI overall. It confirms DAI’s role as a liquid asset but raises concerns about its use in laundering stolen money. Regulators may pay closer attention if such incidents continue. Tracking DAI’s daily trading volume (currently $163 million) and exchange activity is important. (Binance News)
2. Circle Considers Reversible Transactions (Sept 25, 2025)
What happened:
Circle, the company behind USDC stablecoin, proposed allowing transactions to be reversed to fight fraud. This idea goes against the usual “immutable” nature of cryptocurrencies, where transactions can’t be undone.
Why it matters:
This could be good news for DAI. Since DAI is decentralized and doesn’t allow freezing or reversing transactions, it may attract users who want more privacy and control. However, DAI’s success depends on keeping its value stable at $1, especially during market ups and downs. (Yahoo Finance)
3. Polkadot Launches pUSD, Drawing Comparisons to DAI (Sept 29, 2025)
What happened:
Polkadot introduced pUSD, a stablecoin backed only by DOT tokens. Some critics compare this to DAI’s early days when it was backed only by Ethereum (ETH). Experts suggest pUSD should diversify its collateral like DAI does now.
Why it matters:
This is neutral for DAI but highlights its growth. Today, DAI’s collateral includes 35% real-world assets (RWA) and 40% ETH, showing a more mature and diversified approach. DAI’s low price volatility (0.003% over 7 days) compared to pUSD’s untested model may make it more appealing to institutions. (AMBCrypto)
Conclusion
Dai continues to be a leading decentralized stablecoin despite security challenges, regulatory changes, and new competitors. Its market cap stands at $5.36 billion, with steady demand. How DAI’s governance adapts—especially by integrating more real-world assets—will be key to managing risks unique to decentralized finance (DeFi) and maintaining its position.
What is expected in the development of DAI?
Dai’s roadmap is focused on growing its ecosystem, strengthening its ability to handle regulations, and making key technical improvements.
- USDH Stablecoin Integration (Q4 2025) – Partnering with Sky Protocol to issue the USDH stablecoin.
- Governance Token Migration (Ongoing) – Moving control from MKR tokens to SKY tokens for decentralized decision-making.
- Real-World Asset (RWA) Collateral Expansion (2026) – Increasing the use of real-world assets as collateral to back DAI.
- Multi-Chain Liquidity Boost (2025–2026) – Improving cross-chain compatibility and liquidity using LayerZero technology.
Deep Dive
1. USDH Stablecoin Integration (Q4 2025)
Overview: MakerDAO’s new entity, Sky Protocol, plans to issue the USDH stablecoin from Hyperliquid. USDH has a large $2.2 billion liquidity pool and offers a 4.85% yield, which could attract decentralized finance (DeFi) users (Sky proposal). This move aims to make DAI and USDS key players across multiple blockchains through LayerZero technology.
What this means: This is positive for DAI’s usefulness because USDH can bring in new liquidity sources. However, there are risks like competition from centralized stablecoins such as Paxos and questions about whether the yield can be maintained.
2. Governance Token Migration (Ongoing)
Overview: The migration from MKR to SKY tokens is almost complete, with a conversion rate of 1 MKR to 24,000 SKY tokens. After September 2025, late conversions will face penalties (CoinJar). SKY token holders will have exclusive rights to govern the protocol, including making decisions about upgrades and collateral.
What this means: In the short term, this transition may cause some uncertainty and challenges. But in the long term, it could be positive if it leads to more decentralized and effective governance. Keep an eye on how many token holders participate in voting after the migration.
3. Real-World Asset (RWA) Collateral Expansion (2026)
Overview: MakerDAO is expanding its use of tokenized real-world assets like Treasury bonds as collateral. Currently, $13 billion worth of assets are collateralized. The plan includes adding institutional vaults and improving risk management to meet Basel III banking standards (Blockworks).
What this means: This is good for DAI’s stability and demand, but it depends on clear regulatory guidelines. Credit rating agency S&P has given a “B-” rating, indicating some concerns about capital adequacy.
4. Multi-Chain Liquidity Boost (2025–2026)
Overview: DAI is already available on multiple blockchains like Ethereum, BNB Chain, and Arbitrum. This will expand further through partnerships such as with Bitverse PerpDEX, which offers zero-slippage trading and deeper liquidity pools (Bitverse).
What this means: This should help increase adoption by making it easier to trade DAI across different blockchains. However, there is a risk that liquidity could become fragmented. Important metrics to watch include cross-chain DAI trading volume and how well the DAI price peg holds during market ups and downs.
Conclusion
Dai’s roadmap balances new innovations like USDH integration and real-world asset collateral with important upgrades in governance and multi-chain support. While USDS adoption has been slower than expected, DAI remains a foundational tool in decentralized finance. The key question is whether Sky Protocol’s focus on institutional-grade infrastructure can overcome regulatory challenges and competition from other stablecoins. Watch for developments in Q4 2025 partnerships and SKY token governance activity to get a clearer picture of the future direction.
What updates are there in the DAI code base?
Dai’s recent updates focus on improving the protocol and integrating with the wider ecosystem.
- Token Migration to USDS (October 4, 2024) – Users can now convert DAI to USDS at a 1:1 ratio through upgraded smart contracts.
- Sky Protocol Integration (September 5, 2025) – Added cross-protocol liquidity with zero-slippage swaps on Bitverse PerpDEX.
- Governance Transition (October 4, 2024) – Voting power moved to SKY tokens, requiring new contract logic.
Deep Dive
1. Token Migration to USDS (October 4, 2024)
Overview: MakerDAO rebranded as Sky Protocol and introduced USDS, a new stablecoin that can be swapped with DAI one-for-one using a converter contract.
This converter ensures liquidity stays balanced and supports older contracts, but users who delay converting after September 2025 may face penalties.
What this means: This change doesn’t negatively impact DAI’s usefulness. It keeps DAI relevant while opening up new features like the Sky Savings Rate. However, the migration process might slow down adoption temporarily. (Source)
2. Sky Protocol Integration (September 5, 2025)
Overview: Bitverse PerpDEX now supports Sky Protocol’s upgraded MKR token (renamed SKY), enabling trading pairs like DAI/USDT and DAI/USDC with fully on-chain execution.
The system uses Uniswap V3-style liquidity pools, which lowers transaction costs by about 15% compared to older methods.
What this means: This is positive for DAI because it improves liquidity and expands decentralized finance (DeFi) options. Traders benefit from tighter price spreads, though relying on third-party decentralized exchanges (DEXs) carries some risk. (Source)
3. Governance Transition (October 4, 2024)
Overview: Governance control shifted from MKR to SKY tokens, requiring updates to voting smart contracts.
SKY holders can now stake tokens to earn rewards and propose changes like adjusting stability fees. Time-locked proposals were added to protect against governance attacks.
What this means: This change is neutral for DAI. Decentralizing governance makes the protocol more resilient but could slow down decision-making during urgent situations. (Source)
Conclusion
Dai’s codebase is evolving to improve interoperability (through USDS migration), liquidity (via Sky Protocol integration), and decentralized governance. These updates aim to balance innovation with stability, though some challenges remain in adoption. It will be interesting to see how broader DeFi trends, like using real-world assets as collateral, influence Dai’s future technical developments.