DAI, the decentralised stablecoin managed by MakerDAO, achieved a remarkable milestone in 2024. The digital asset led Ethereum’s on-chain stablecoin transaction volume with an astonishing $4.7 trillion.
This figure underscores DAI’s growing influence in the decentralised finance (DeFi) ecosystem. The latest milestone positions it as a formidable player among stablecoins like Tether (USDT), USD Coin (USDC), and PayPal USD (PYUSD).
However, despite its impressive performance, DAI remains less prominent in mainstream adoptions compared to its centralised counterparts.
In this article, CryptoGuide GH explores DAI’s rise, evaluates its underrated status, and identifies barriers to its broader acceptance. We will also examine its competitive strategies and highlight companies embracing DAI as a transactional currency.
Is DAI an underrated stablecoin?
Undoubtedly, DAI’s $4.7 trillion on-chain volume on Ethereum in 2024 indicates its robust adoption within DeFi, despite often being overlooked in comparison to USDT and USDC.
Unlike its competitors, DAI operates without a central authority, relying on smart contracts and over-collateralised crypto assets to maintain its $1 peg to the U.S. dollar.
This decentralised nature appeals to DeFi enthusiasts who prioritise trustless systems, as DAI’s transparent blockchain-based operations eliminate dependence on a single entity.
For instance, its integration into lending platforms, liquidity pools, and yield farming has made it a cornerstone of DeFi. This has contributed to MakerDAO’s $2.58 billion in total value locked (TVL) as of May 2025.
Moreover, DAI’s stabilisation mechanisms, such as the Dai Savings Rate (DSR) and over-collateralisation, ensure resilience against market volatility.
Unlike Terra’s UST, an algorithmic stablecoin which collapsed due to under-collateralisation, DAI’s multi-collateral system, which supports assets like ETH, USDC, and Wrapped Bitcoin, has proven robust.
However, DAI’s market capitalisation of approximately $5.3 billion pales in comparison to USDT’s $152 billion and USDC’s $60 billion, suggesting it remains underappreciated in broader markets.
Its decentralised philosophy and technical complexity may not resonate with mainstream users, contributing to its underrated status despite its on-chain dominance.
What’s preventing DAI from gaining the same traction as other stablecoins?
Several factors hinder DAI’s ability to match the traction of USDT, USDC, and PYUSD. First, it has a decentralised structure. Although the stablecoin’s decentralised nature is a strength for DeFi, a lack of centralisation poses challenges for mainstream adoption.
Unlike USDT and USDC, which are issued by centralised entities (Tether Limited and Circle, respectively), DAI relies on complex smart contracts and collateralised debt positions (CDPs).
This complexity can deter less tech-savvy users who prefer the simplicity of fiat-backed stablecoins. For example, USDT’s average daily trading volume of $50 billion is more than twice DAI’s of about $20 billion. This reflects its broader market liquidity and accessibility.
Second, regulatory scrutiny presents a hurdle. Centralised stablecoins, like USDC, benefit from regulatory compliance. Circle’s transparent audits foster trust among institutional investors.
U.S. STABLE ACT
In contrast, DAI’s decentralised nature makes it harder to align with evolving regulations, such as the U.S. STABLE Act. The STABLE Act allows foreign payment stablecoin issuers to offer and sell stablecoins in the U.S., provided two conditions are met. First, a foreign authority, whose regulatory framework the Secretary of the Treasury deems equivalent to U.S. standards, regulates the issuer. Secondly, the issuer agrees to comply with U.S. reporting and examination obligations.
This Act could impose bank-like standards on stablecoin issuers. This regulatory uncertainty may discourage institutional adoption.
Third, DAI’s reliance on volatile crypto collateral introduces risks. While over-collateralisation mitigates price swings, events like the March 2023 Silicon Valley Bank failure, which caused USDC to depeg and affected DAI due to its USDC backing, highlight vulnerabilities.
Such incidents can erode confidence among risk-averse users.
Finally, marketing and brand recognition play a role. Tether’s first-mover advantage and USDC’s backing by Coinbase and Circle give them widespread visibility.
PYUSD, leveraging PayPal’s vast user base, integrates seamlessly into everyday transactions.
DAI, however, lacks similar mainstream exposure, limiting its reach beyond DeFi circles.
How does DAI compete with Tether, Circle, and PayPal?
Despite these challenges, DAI competes effectively in the stablecoin market with its unique decentralised model and DeFi integration.
Unlike Tether, which has faced criticism for opaque reserve practices, DAI’s blockchain-based collateral system ensures transparency. As a result, all transactions are publicly verifiable. This appeals to users who are wary of centralised control, especially after Tether’s $41 million fine for misleading reserve claims in 2021.
Against Circle’s USDC, DAI differentiates itself by avoiding counterparty risks tied to centralised reserves.
While USDC’s reserves are held in regulated banks, DAI’s overcollateralized crypto assets, managed by MakerDAO’s smart contracts, reduce dependency on traditional financial institutions (TradFi).
For instance, users can mint DAI by locking assets in Maker’s Oasis Borrow dashboard, fostering a permissionless ecosystem.
Compared to PYUSD, DAI’s Ethereum-based infrastructure offers broader compatibility with DeFi protocols.
While PYUSD targets seamless integration within PayPal’s ecosystem, DAI’s versatility across lending, borrowing, and trading platforms gives it an edge in decentralised applications.
Additionally, DAI’s DSR allows holders to earn interest by locking tokens, a feature not offered by USDT or PYUSD.
To strengthen its position, MakerDAO has expanded DAI’s collateral options. MakerDAO incorporated assets like Basic Attention Token (BAT) and USDC, enhancing stability and diversification.
The recent rebranding to Sky, introducing Sky Dollar (USDS) and SKY governance tokens, aims to improve governance and features, further bolstering DAI’s competitiveness.
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What companies have adopted DAI as a transactional currency?
DAI’s adoption as a transactional currency is growing, particularly in DeFi and niche use cases. Several companies and platforms have integrated DAI, leveraging its stability and decentralisation.
For example, Oxfam has tested DAI for distributing aid in the Pacific island of Vanuatu. Oxfam decided on DAI to capitalise on its instant transaction capabilities and transparency. This initiative highlights DAI’s potential in humanitarian applications, where trust and efficiency are paramount.
In the DeFi space, platforms like Uniswap, Compound, and Aave heavily utilise DAI for liquidity pools and lending.
These protocols rely on DAI’s stability for seamless trading and collateralisation, contributing to its high on-chain volume.
Additionally, B2BinPay, a crypto payment platform, supports DAI alongside USDT and USDC, enabling businesses to accept it for online transactions.
In Argentina, where inflation drives demand for stable assets, some savers use DAI to hedge against currency devaluation.
This grassroots adoption underscores DAI’s utility in emerging markets. Furthermore, Wirex, a payment app, has entered the U.S. market with stablecoin support, including DAI, for Visa-backed transactions, signalling potential growth in retail use.
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Conclusion: Should you consider using the stablecoin?
DAI leads Ethereum’s 2024 stablecoin on-chain volume, with $4.7 trillion in transactions, cementing its pivotal role in DeFi.
Its decentralised model, transparent operations, and robust stabilisation mechanisms make it a compelling alternative to USDT, USDC, and PYUSD.
However, challenges like complexity, regulatory hurdles, and limited mainstream visibility prevent it from matching its competitors’ traction.
By leveraging its DeFi dominance, expanding collateral options, and targeting niche use cases, DAI continues to carve a unique niche.
As companies like Oxfam, B2BinPay, and Wirex adopt DAI, its potential as a transactional currency grows. This suggests a bright future for this underrated stablecoin in the evolving crypto landscape.
