What could affect the price of DAI?

Dai’s stability is facing several challenges.

1. Regulatory Pressure – The U.S. GENIUS Act requires stablecoins to be fully backed by cash or government securities, which conflicts with Dai’s crypto-backed model.
2. Market Competition – Yield-focused stablecoins like USDe and USDS, along with big centralized players like USDT and USDC, are taking market share.
3. Collateral Risks – Dai’s heavy reliance on Ethereum (ETH) means a sharp drop in ETH’s price could trigger large-scale liquidations.

In-Depth Analysis

1. Regulatory Compliance Risks (Negative Impact)

Background: Starting July 2025, the U.S. GENIUS Act mandates that stablecoins must hold 100% reserves in cash, U.S. Treasuries, or similar assets. Dai, which is backed by cryptocurrencies like ETH and WBTC, doesn’t meet this requirement. While Dai’s decentralized setup means it isn’t directly regulated, exchanges and financial institutions may prefer stablecoins like USDC that comply with these rules. For example, Circle, the issuer of USDC, became the first SEC-registered stablecoin issuer in June 2025.
Implications: Because Dai relies on crypto collateral, it may lose favor in traditional finance (TradFi) settings where regulatory compliance is critical. This could reduce demand for Dai and limit its use in mainstream financial applications.

2. Competition in DeFi Yield (Mixed Impact)

Background: Some stablecoins offer attractive interest rates to users. For instance, Ethena’s USDe offers about 10.86% APY, and Sky’s USDS offers around 4.75% APY. However, the GENIUS Act prohibits paying interest on stablecoins regulated in the U.S. Dai’s own savings rate (DSR) remains at 0% following its rebranding to Sky Protocol, according to Blockworks.
Implications: Yield-seeking investors might move to other stablecoins offering better returns, making Dai less attractive. On the other hand, Dai’s decentralized nature could appeal to users who prefer less centralized control, especially during times of market uncertainty.

3. Collateral Stability and Liquidation Risks (Negative Impact)

Background: Dai maintains its value by requiring users to lock up more collateral than the amount of Dai they generate — for example, 145% collateral for ETH-backed vaults. If ETH’s price falls by 30%, it could trigger liquidations totaling around $1.2 billion, according to MakerDAO’s risk dashboard. Recent large sales of Dai by Ethereum Foundation wallets ($28.36 million in August 2025) show how sensitive Dai is to ETH price swings.
Implications: A sudden drop in ETH’s price could force many users to sell collateral quickly, potentially causing Dai to lose its peg temporarily. Additionally, the $45 million in Dai held by the July 2025 Coinbase hacker could add to selling pressure if liquidated suddenly.

Conclusion

Dai’s price stability depends on how well it can handle regulatory changes, stay relevant in the competitive DeFi space, and manage risks tied to ETH price volatility. While its decentralized approach remains appealing to some, Dai’s shrinking market share (currently the 4th-largest stablecoin) shows it faces tough competition. A key factor to watch is ETH’s price—if it falls below $3,500, it could test MakerDAO’s liquidation protections and impact Dai’s stability.

What are people saying about DAI?

DAI’s stability and use in decentralized finance (DeFi) spark ongoing discussions, but its liquidity also attracts hackers. Here’s what’s trending:

1. Coinbase hacker swaps $12.5M DAI for ETH – raising concerns about DAI’s involvement in money laundering.
2. Stablecoin comparison – DAI’s overcollateralization versus USDe/USDD’s higher yields and peg stability.
3. Ethereum Foundation wallets exchange ETH for DAI – prompting questions about their treasury management strategy.

Deep Dive

1. @OnchainLens: Hacker’s use of DAI liquidity

“Coinbase hacker converted $12.5M DAI to 4,863 ETH (at $2,569/ETH), holding $45.36M in DAI reserves.”
– @OnchainLens (1.2M followers · 8.7M impressions · 2025-07-07 08:52 UTC)
View original post
What this means: This is a negative signal for DAI’s reputation, as large-scale illicit activity could lead to increased regulatory attention. However, it also highlights how liquid and accessible DAI is in the market.

2. @0xMoon6626: DAI’s tradeoffs in stability and yield

“DAI offers a 3.24% yield, which is lower than USDD’s 6-10%, but its overcollateralization lowers the risk of losing its peg compared to algorithmic stablecoins.”
– @0xMoon6626 (89K followers · 420K impressions · 2025-08-30 08:22 UTC)
View original post
What this means: This is a balanced view for DAI. Its security-first design appeals to users who prioritize stability and risk management, but it may not attract those looking for higher returns offered by some centralized stablecoins.

3. @TrustWallet: DAI’s integration with wallet-based yield

“Stablecoins like DAI now earn passive yield directly within wallets—no need for external apps.”
– @TrustWallet (4.5M followers · 12.1M impressions · 2025-07-13 16:11 UTC)
View original post
What this means: This is positive for adoption, as easy-to-access yield opportunities could attract everyday users interested in low-effort exposure to DeFi.

Conclusion

The overall view on DAI is mixed. It is praised for its decentralized stability but faces criticism for lower yields and its connection to high-profile hacks. Keep an eye on the DAI Savings Rate and collateralization ratios following MakerDAO’s rebranding to Sky Protocol, as upcoming protocol improvements may change DAI’s risk and reward balance.

What is the latest news about DAI?

Dai is navigating security challenges, expanding its ecosystem, and adapting to regulatory changes—all while maintaining its stable value. Here are the key updates:

1. Coinbase Hack Funds Swapped Using DAI (October 2, 2025) – $5 million worth of DAI was converted to USDC, raising questions about compliance.
2. Keel Launches $2.5 Billion Solana DeFi Project (September 30, 2025) – Sky’s new platform uses USDS (an upgraded version of DAI) to grow Solana’s decentralized finance (DeFi) market.
3. Circle Proposes Reversible Transactions (September 25, 2025) – A move that could challenge DAI’s reputation for censorship resistance.

Deep Dive

1. Coinbase Hack Funds Swapped Using DAI (October 2, 2025)

What happened: A hacker involved in the May 2025 Coinbase breach converted $5 million in Dai (DAI) to USDC through Circle’s CCTP bridge. Despite having 35 minutes to act, Circle’s compliance systems couldn’t freeze the funds, allowing the hacker to move assets out. The original breach affected nearly 70,000 wealthy users and caused losses estimated between $200 million and $400 million.

Why it matters: This event exposes weaknesses in how stablecoins handle compliance and security. It may push centralized stablecoins to tighten controls, but DAI’s decentralized, non-custodial design could appeal to users who want protection from centralized freezes. (Yahoo Finance)

2. Keel Launches $2.5 Billion Solana DeFi Project (September 30, 2025)

What happened: Sky (formerly MakerDAO) introduced Keel, a platform focused on Solana, deploying USDS (an upgraded version of DAI) into popular DeFi platforms like Kamino and Raydium. This initiative aims to grow Solana’s real-world asset lending and DeFi markets.

Why it matters: Expanding onto Solana enhances DAI’s use across multiple blockchains and could increase demand for USDS. While the transition from the original DAI is gradual, this move signals Sky’s strategic focus on generating yield through DeFi. (Yahoo Finance)

3. Circle Proposes Reversible Transactions (September 25, 2025)

What happened: Circle suggested allowing USDC transactions to be reversed to fight fraud, which goes against the usual crypto principle that transactions are permanent. This contrasts with DAI’s decentralized governance, which does not allow centralized freezes or reversals.

Why it matters: Regulatory pressure on centralized stablecoins like USDC might strengthen DAI’s position as a censorship-resistant alternative. However, Sky’s rebranding and USDS launch show it’s trying to balance compliance with decentralization. (Yahoo Finance)

Conclusion

Dai is balancing two major forces: growing through new DeFi opportunities on Solana while resisting regulatory pressures that could push it toward centralization. The big question remains—will USDS adoption surpass the original DAI, or will regulatory demands lead to more centralized compromises?

What is expected in the development of DAI?

Dai’s roadmap centers on improving governance, expanding its ecosystem, and meeting new regulations.

1. Governance Changes (2025–2026) – Moving to a modular governance system called Sky Protocol.
2. USDS Integration (Ongoing) – Replacing DAI with USDS, a stablecoin with the same mechanics but updated features.
3. Ecosystem Growth (2026) – Building new decentralized units called “Stars” to attract more capital.
4. Staking Updates (2026) – Introducing protections against certain token risks and encouraging longer-term staking.
5. Regulatory Compliance (2025–2026) – Adjusting to European and global stablecoin regulations.

Deep Dive

1. Governance Changes (2025–2026)

Overview: In 2024, MakerDAO rebranded to Sky Protocol, shifting to a modular governance model. Instead of traditional token voting, a “Core Council” will make key decisions. This aims to speed up governance and reduce dependence on the founder, Rune Christensen, who holds about 9% of SKY tokens.

What this means: This change is generally positive or neutral for Dai/USDS adoption. While some centralization risks remain, the new structure could make governance more efficient and scalable.

2. USDS Integration (Ongoing)

Overview: DAI is gradually being replaced by USDS, a rebranded stablecoin with the same underlying mechanics but aligned with the Sky Protocol brand. Users can swap DAI for USDS at a 1:1 ratio. However, if users delay upgrading, a 1% penalty applies every three months (CoinJar).

What this means: In the short term, this is neutral since the core functions remain unchanged. However, there’s a risk that demand for DAI could persist, causing fragmentation.

3. Ecosystem Growth (2026)

Overview: Sky plans to expand through “Stars,” which are semi-independent groups focusing on specific markets like real-world assets (RWA) and institutional vaults. A $25 million fund called “Hyperliquid Genesis Star” will support partnerships in decentralized finance (DeFi) (Blockworks).

What this means: This is positive for the network’s usefulness if these Stars bring new types of collateral or earning opportunities. However, there are risks in successfully executing this plan.

4. Staking Updates (2026)

Overview: Upcoming staking reforms will penalize liquid staking tokens (LSTs) to reduce risks and reward users who lock up SKY tokens for longer periods. This aims to discourage short-term speculation in governance.

What this means: These changes could strengthen governance by encouraging stable participation but might reduce liquidity in the short term.

5. Regulatory Compliance (2025–2026)

Overview: Sky must comply with the European Union’s MiCA regulations, which require stablecoin issuers to hold sufficient liquidity reserves. Failure to comply could lead to delistings, like Bit2Me’s removal of DAI in 2025 due to MiCA (Bit2Me).

What this means: Compliance could be costly and strain reserves, which is a downside. However, meeting these rules may increase trust and attract institutional investors.

Conclusion

Dai’s transition to USDS under Sky Protocol focuses on making governance more efficient, growing the ecosystem, and adapting to regulations. While the rebranding might alienate some existing users, new partnerships and staking reforms could strengthen its position in decentralized finance. The key question remains: Will USDS’s focus on institutional adoption outweigh the trade-offs in decentralization?

What updates are there in the DAI code base?

Dai’s recent updates focus on governance-led interest rate changes and improvements to how the protocol works with other systems.

1. SparkLend DAI Rate Model Update (April 2025) – Adjusted borrowing rates to better balance cost and stability.
2. Multi-Collateral Migration Guide (2020) – An earlier update that allowed Dai to support multiple types of collateral instead of just one.

Deep Dive

1. SparkLend DAI Rate Model Update (April 2025)

Overview: MakerDAO’s community approved changes to the interest rate system for Dai on SparkLend Ethereum. The goal is to keep the system stable and make borrowing more efficient.

The updated rates are:

• Base Rate: 0.75% — This keeps borrowing costs low during calm market periods.
• Jump Rate: 15% — This higher rate kicks in when borrowing demand is very high, encouraging users to pay back loans faster.
• Kink: 80% — This is the point where the interest rate jumps sharply.

What this means: This update is generally positive for Dai. It helps keep borrowing affordable most of the time but raises rates when demand spikes, reducing the chance of bad debt. (Source)

2. Multi-Collateral Migration Guide (2020)

Overview: Although this update is older, it was a key step that allowed Dai to move from using only Ethereum (ETH) as collateral to accepting multiple assets like USDC and WBTC.

What this means: This change is important because it makes Dai more secure and flexible by backing it with a variety of assets instead of relying on just one.

Conclusion

Dai’s recent updates show a careful approach to managing risk and liquidity through community governance. The SparkLend rate changes demonstrate MakerDAO’s commitment to adjusting interest rates based on market conditions. Looking ahead, future upgrades may help Dai become even more stable and less dependent on centralized assets.