Without money, we have barter. This is to say that we could trade two of one thing for three of another, but as the variety of things we trade increases, determining their relative value is challenging. In the crypto space, with the increasing popularity of consumer tokens and collectibles, trades are often made directly between assets, but also often made in exchange for a base asset like ether, the native currency of the Ethereum ecosystem.

A stable medium of exchange

The challenge with ether as a base asset is its volatility. To price one asset against another that is constantly changing in relative value returns us to the confusing situation of barter. Additionally, if the relative value of assets change consistently, consumers are unnecessarily encouraged to either hold or spend the asset rather than use it as a medium of exchange.

If there were a way to represent a truly stable asset as an Ethereum token, that would surely be a boon to the entire ecosystem. The most stable, the United States dollar, has served as the world’s currency for many years at around two-thirds of official foreign exchange reserves. But to represent USD in the Ethereum ecosystem presents many challenges. Enter Dai.

Enter the Dai stablecoin

The Dai Stablecoin is a collateral-backed cryptocurrency whose value is stable relative to the US Dollar. Dai provides stable denominations for token trades, which are incredibly important for a decentralized marketplace like AirSwap.

From the whitepaper, “Maker is a smart contract platform on Ethereum that backs and stabilizes the value of Dai through a dynamic system of Collateralized Debt Positions (CDPs), autonomous feedback mechanisms, and appropriately incentivized external actors.”

Having gone live on the Ethereum Mainnet in December, the MakerDAO team has shown consistent development and engagement with the community, and the DAI itself has consistently hovered around $1 as advertised.