Dai (DAI) exchange rate: how did the price of the main "decentralized" stablecoin change?
Dai has a rich history: the stablecoin survived more than one de-peg incident, ultimately retaining its peg to the U.S. dollar — this says a lot about the reliability of this asset.
Early Dai period (2019 — 2022)
The DAI stablecoin appeared on exchanges in November 2019, hitting $0.99 immediately after listing. In the first year since its release to the market, the rate of the DAI stablecoin was the most volatile — it deviated most strongly from the value of the U.S. dollar, to which it is pegged.
First, it was due to low liquidity in the crypto market and small capitalization. For example, DAI's capitalization crossed only the $50 million mark in May 2020 and $1 billion a year after listing in November 2020.
In fact, throughout the first year after the launch, the DAI rate deviated from the U.S. dollar in one direction or the other. According to CoinMarketCap, the average value of DAI varied from $0.97 to $1.04 throughout this period. This made DAI not the most reliable stablecoin. However, given its small capitalization, such deviations in the stablecoin's exchange rate against the U.S. dollar are not critical. Especially considering that the volatility of the DAI stablecoin eventually came to normal as capitalization increased.
From November 2020 and for the next twelve months, the price of the DAI stablecoin was relatively stable. It only deviated most of the time to either $1.008 or $0.98, significantly less than the previous year.
However, in November 2021, an unprecedented event occurred as the DAI stablecoin rate skyrocketed to $3.67 and reached an all-time high (ATH). This was due to the skyrocketing demand for stablecoin. The initial influx of investors caused the price of DAI to spike, resulting in borrowers having to buy DAI on the market to avoid liquidating collateral, which only accelerated the price of DAI.
Crypto market correction and recovery (2023 — 2024)
Until March 2023, the DAI mechanism had no significant deviations or bug incidents. However, on March 11, 2023, an incident occurred; as a result, the DAI stablecoin rate lost parity to the U.S. dollar.
The matter is that details about the reserves of the USDC Circle stablecoin issuer became known: it turned out that about 8.7 billion dollars were stored in the bankrupt Silicon Valley Bank. This led to the de-pegging (loss of the USD exchange rate peg) of the USDC stablecoin.
Since, at that time, 45% of DAI's stablecoin reserves were backed by USDC tokens, Dai also began to lose its peg to the dollar following USD Coin — as a result, its exchange rate dropped to $0.89. As of October 2024, this was the latest incident, and there have been no significant deviations in the DAI exchange rate from the value of the USD since November 11, 2023.
As the DAI price history shows, the stablecoin, despite the listed de-peg incidents, was able to eventually maintain parity to the U.S. dollar, thus proving its worth as a stable asset.
According to CoinMarketCap, since November 2023, the value of the DAI stablecoin has not deviated from the USD by more than 1%. In addition, the liquidity of DAI on exchanges has grown significantly over the same period, but the capitalization has remained almost the same at $5.37 billion.