DAI is a type of cryptocurrency known as a stablecoin, which means its value is designed to remain stable and is typically pegged to a traditional currency, like the US dollar. This stability makes DAI useful for transactions and as a store of value in the often volatile world of cryptocurrencies. DAI operates on the Ethereum blockchain and is managed by a decentralized organization called MakerDAO. Users can create DAI by depositing collateral, such as Ethereum, into a smart contract. This process ensures that there is always enough backing for the DAI in circulation, maintaining its peg to the dollar.