Sai

Sai (SAI)

Sai, previously known as Single Collateral DAI (SCD), is a decentralized stablecoin that was part of the MakerDAO ecosystem. It was designed to facilitate stability in the world of cryptocurrencies by maintaining a value pegged to the US dollar. Although it played a foundational role in the development of decentralized finance (DeFi), Sai has since been succeeded by Multi-Collateral DAI (MCD), commonly known as DAI.

History of Sai

Sai was introduced as the first iteration of the DAI stablecoin by MakerDAO, a decentralized organization that operates on the Ethereum blockchain. MakerDAO sought to create a stable digital currency that could be used for transactions without the volatility typically associated with cryptocurrencies. Sai was launched to achieve this goal, using a smart contract system that allowed users to lock Ether (ETH) as collateral and generate Sai in return.

As the DeFi landscape evolved, the need for a more flexible and scalable stablecoin became apparent. This led to the transition from Sai to Multi-Collateral DAI (MCD) in November 2019. The new system allowed for multiple types of collateral, not just ETH, providing greater stability and security.

How Sai works

Sai functioned on the principle of collateralized debt. Users would deposit Ether into a smart contract called a Collateralized Debt Position (CDP). This mechanism allowed them to generate Sai, which could then be used for various purposes like trading, lending, or other DeFi applications. The system employed a unique stability fee, which users had to pay to retrieve their locked collateral, ensuring the value of Sai remained stable.

The stability mechanism was further supported by price feeds that tracked the value of Ether. If the value of the collateral dropped significantly, the system would automatically liquidate the CDP to maintain the collateralization ratio and ensure the stability of Sai.

Transition to Multi-Collateral DAI

The introduction of Multi-Collateral DAI marked the end of Sai's role as the primary stablecoin in the MakerDAO ecosystem. The transition allowed the platform to accept various collateral types beyond Ether, including assets like BAT (Basic Attention Token) and others. This shift aimed to enhance the stability and security of the DAI ecosystem.

The migration from Sai to MCD involved users transitioning their Sai holdings to DAI, which became the standard stablecoin. The MakerDAO community provided tools and support to facilitate this migration, ensuring a smooth transition for users and maintaining the stability of the overall system.

Sai's impact on the DeFi space

Sai was instrumental in establishing the foundation for decentralized stablecoins and the broader DeFi movement. It demonstrated the potential for a decentralized stable currency, paving the way for innovations in decentralized finance. The transition to Multi-Collateral DAI further expanded these possibilities, allowing for greater flexibility and resilience in the DeFi ecosystem.

Although Sai is no longer in use, its legacy continues through the ongoing development and success of DAI and the MakerDAO platform.