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Let's get into the article!
First off, what is USDT? And what is DAI?
DAI is a stable coin, which means it is usually worth approximately $1. The same is the case for USDT.
How do they differ? DAI differs from USDT in some ways, which we will look at in this article.
HOW DAI DIFFERS FROM USDT
DAI is a stable coins backed by ETH collateral. This means that for every DAI created, a certain amount of ETH is placed into holding to collaterise the DAI. Every time the price of ETH rises, a smart contract reduces the amount of ETH that is being collaterised to ensure that the price of the DAI remains close to $1. The opposite is the case when the price of ETH falls.
USDT on the other hand is supposedly backed by real world dollars. This means that for every USDT created, an actual real world dollar is put into a vault. Of course this can't be proven, and Bitfinex, the company behind Tether has refused multiple audits as to their claims that they do have the backing of the USDT.
Which brings us to our next point: USDT is centralised, while DAI is decentralised.
DAI is created by the DAO, which is a kind of decentralised bank. They also create Maker, which is their tokenised asset.
USDT on the other hand is created by a centralised exchange called Bitfinex. They are a pretty old exchange starting out in 2013, and they have been the target of many hacks and cryptocurrency theft. They also have no proof that they really do collaterise their USDT Token with actual USD. This seems rather sketchy to me, because it means they can continuously print money without any consequences.
So let's put it all together. Which one is better?
Obviously DAI is the better option. It's decentralised, has actual backing which can be proven and is much more limited than USDT.
Those are just my opinions though. What do you think about this topic?
Let me know down below.
Thanks for reading.
