Key Points

• Unlike other top stablecoins, Dai has no central governing body that could freeze assets.

• A decentralized autonomous organization (DAO) regulates Dai, and smart contracts manage the stablecoin itself.

1. Support decentralization

We'll start with the biggest difference between Dai and many of the other largest stablecoins. A decentralized, autonomous organization (DAO), Sky (formerly known as MakerDAO), regulates Dai. Anyone who holds the organization's governance token can make proposals and vote on changes for the stablecoin. Dai is entirely decentralized, meaning no regulating body or government could theoretically freeze assets or accounts.

The two largest stablecoins, Tether and USDC (CRYPTO: USDC), both have companies that manage them and issue new tokens. Tether Limited is the issuer for Tether, and it has a controversial reputation for not being fully transparent about its fiat reserves. The Commodity Futures Trading Organization fined Tether Limited $41 million in 2021 for claiming that Tether was fully backed by U.S. dollars.

Circle, which just completed its initial public offering (IPO) in June 2025, is the issuer for USDC. It doesn't have the same reputational concerns as Tether -- Circle has provided monthly attestations to USDC's reserve since the stablecoin's launch in 2018, with assurances from a Big Four accounting firm.

Still, decentralization was the original ethos of cryptocurrency. If the idea of a digital currency with no central governing body is important to you, then Dai is likely the most appropriate stablecoin to buy. There are now more stablecoins that work similarly, but Dai is also second only to Tether in trading volume, so it's easy to buy, sell, and swap for other cryptocurrencies.

2. Earn passive income through savings and lending programs

One of the financial benefits of holding stablecoins is that you can earn rewards on them. Just like you could put your cash in a savings account or a certificate of deposit (CD) to earn interest, you can do the same with cryptocurrency -- and more.

Some crypto exchanges pay interest on stablecoin balances. Lending platforms also exist that let you deposit stablecoins (or other types of cryptocurrency) and earn interest.

It's worth mentioning that USDC and Tether are generally better choices for earning rewards. There are more crypto exchanges that pay interest on those two stablecoins than on Dai.

Sky (the DAO behind Dai) offers Sky Protocol, which pays a variable rate on stablecoin savings that you deposit. The rate is 4.5% at the time of this writing (July 22). But to earn that rate, you need the upgraded version of Dai that was launched last year, USDS (CRYPTO: USDS).

You can convert DAI tokens to USDS tokens at a 1:1 ratio, and you can also convert USDS back to Dai if you want. The value and functionality are the same. It's not quite as straightforward as earning a return on USDC or Tether, though.

3. Use with DeFi apps and services

Decentralized finance, or DeFi for short, refers to financial systems built on blockchain technology. We already covered one example of a DeFi service with crypto lending platforms, which run on a blockchain and are governed by smart contracts. They allow users to fund and borrow crypto loans without any sort of financial institution involved. Decentralized crypto exchanges are another example, where you can swap cryptocurrencies with no registration process required.

There's currently $140 billion in total value locked (TVL) in DeFi protocols across different blockchains, according to DeFiLlama, up about $45 billion in the past year. The popularity of DeFi has been instrumental to the success of the biggest smart contract blockchains, including Ethereum and Solana.

To use DeFi, you need a crypto wallet, and you may also want to have some stablecoins in that wallet. They give you a stable digital asset to swap, lend out, and use with any other DeFi apps and services that interest you. Dai is far from your only option, but it's a good choice because it's widely used.

Ultimately, Dai isn't for everyone. Some may feel more comfortable with a stablecoin that has fiat reserves, in which case USDC is probably a better fit. But if you value decentralization, you may want to go with Dai for your wallet.

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