Buy Dai | Trade DAI in Canada | Wealthsimple (2024)

DAI is a cryptocurrency that is pegged to the value of the U.S. dollar. The token is what’s known as a stablecoin. Unlike so many volatile cryptocurrencies, DAI aims to stay at a steely $1 value at all times.

The Ethereum-based token is rather different from more popular stablecoins like USDC and Tether, which maintain their peg to the U.S. dollar through claimed deposits of real money and loans. The companies that run those coins hold most of their cash in stable financial instruments, like money market funds, treasury bonds and commercial instruments.

By contrast, DAI is decentralized: no single entity is responsible for ensuring that the coin maintains its price of $1. Instead, DAI maintains its peg through a complicated system of overcollateralized loans. The coin is created whenever people want to borrow it via MakerDAO, the decentralized lending protocol responsible for DAI.

An overcollateralized loan is a loan in which the collateral is worth more than the loan itself. This ensures that even volatile cryptocurrencies, such as Ethereum, can be used to back DAI: even if the value of ether in reserve tanks, the theory goes, there should still be more than enough to cover the value of the DAI. When each loan is repaid, the related DAI is destroyed, keeping the token’s supply constantly in flux.

The collateralization ratio for the cheapest Ethereum deposit is set at 170%, meaning that $170 of Ethereum will allow you to withdraw $100 of DAI. If the price of Ethereum crashes, this loan will be liquidated, and you’ll have to pay a penalty fee. On the surface, this seems like a terrible deal: why would someone borrow $170 of Ethereum to receive just $100 of DAI, plus the threat of liquidation (and an associated penalty fee) if ETH crashes?

The main reason is that by taking out DAI, you’re putting your other cryptocurrency, in this case, ETH, to work. You could borrow $100 of DAI, sell it for ETH, and then deposit that ETH in the MakerDAO vault to borrow even more DAI. So long as ETH increases in value, you can essentially leverage your ETH position within MakerDAO’s decentralized lending protocol.

Alternatively, you could put all that DAI to work in another decentralized lending protocol that might pay outsized yields on your deposits. In effect, MakerDAO lets you earn income from decentralized finance protocols by taking out a loan to increase the size of your initial investment.

This model has remained relatively robust since DAI’s creation in December 2017. However, when the coronavirus pandemic caused an economic crash in March 2020, DAI almost slipped from its $1 peg, and the people who ran it — those who hold lots of Maker governance tokens — allowed it to be backed by USDC, a centralized stablecoin. Since the flash crash, the coin has reduced its USDC backing.

You can use MakerDAO’s Oasis vaults to leverage your crypto holdings using DAI. This is an advanced trading strategy that requires you to fork up a lot of money up front — and could result in huge losses if the price of the volatile cryptocurrency you’re using to generate DAI crashes.

Many DAI users don’t bother with generating or destroying DAI through MakerDAO vaults, and simply use it as a stablecoin. Stablecoins are useful in the volatile crypto economy because they are, as the name suggests, stable. When markets crash, it’s a lot easier (and quicker) to sell a volatile cryptocurrency for a stablecoin than it is to sell it for real U.S. dollars. Plus, you can’t use real U.S. dollars in decentralized finance protocols (like yield farms, lending protocols and decentralized exchanges), but you can use DAI.

As Canada’s first regulated crypto trading platform, we’re required to meet certain requirements — like using only qualified custodians (like Coinbase Custody) for cold storage.

FYI: Wealthsimple Crypto is not an exchange itself. Instead, we work with multiple exchanges to give you the best Dai prices.

And to make sure your coins are extra protected, we’ve partnered with Coincover for an extra layer of security.

If you’re holding crypto outside of Wealthsimple, that’s no problem. You can safely transfer your Dai to your Wealthsimple account in just a few taps.

As of March 1, 2022, there are 9,698,845,693 DAI tokens in circulation, each of which is worth $1. This makes DAI the second largest decentralized stablecoin; the largest is TerraUSD (UST), which has a market cap of $13 billion. Decentralized stablecoins have smaller markets than centralized stablecoins: the two largest, USDC and Tether, have market caps of $54 billion and $80 billion, respectively.

Yep! When you open a Wealthsimple Crypto account, you can get started with anywhere from $1 to $1,500 instantly.

Dai’s current market cap is 4,473,209,364.

The current price for Dai in Canadian dollars is $1.38.

You can withdraw funds from the cash balance in your Crypto account and move those funds to your bank account. Withdrawals typically take around 2 - 3 business days.

A crypto wallet — often called a “hot wallet” — is a location for holding crypto “on-chain” (i.e. linked to the blockchain versus off-chain cold storage.) Many users use wallet applications to help them manage their blockchain addresses, since each chain uses its own addresses.