DAI Vs USDT: Place Your Bet

DAI and USDT are two of the leading stablecoins that are presently available in the cryptocurrency marketplace.
USDT was launched as the pioneer stablecoin in November 2017 and immediately gained some traction in the crypto sphere. It today holds the 10th position on the list of the 20 most traded cryptocurrencies.

DAI, on the other hand, is placed 150 on the list of the Top 200 cryptocurrencies by market cap and was launched early in 2017 Q4.

Tether runs on the Omni Layer Protocol of the Bitcoin blockchain. It has now developed Ethereum blockchain compatibility and its ERC20 tokens have a market supply of 3,080,109,502 USDT.

DAI is issued by the MakerDAO Ethereum smart contract when a user sends in the required ETH to back up the expected USD. It has 53, 390,150 tokens in circulation.

Tether and DAI cannot be mined as they are non-mineable tokens.

Reserve Backing

Tether is backed up by fiat currency, and this explains its rating as an equivalent to the USD. Tether is confidently traded based on the understanding that it has bank balances as a backup of its tokens in issue.

is backed up by pooled ETH, and not by fiat money. In other words, it is created when a user provides ETH to cover the expected USD at a ratio of 2:1. So, the price does not necessarily fluctuate, as the collateralized debt position is locked.


In terms of transparency, Tether was in the news in the early part of the year over claims that it lacks a fully funded reserve backing. Those fears seem to have been dispelled with recent media reports that point to the contrary.
DAI, on the hand, has no controversies dogging it as its tokens are only created when a user places an order that is fully backed up by PETH.

Head- to- Head

On a head-to-head basis, DAI is high on transparency and is decentralized. Tether, on the other hand, is centralized.
DAI looks costly to create as the user has to deposit an equivalent amount of USD to serve as a price fluctuation safeguard.

The risk of default on the Tether platform is more with the fiat backup having a possibility of compromise. DAI, however, stays clean as it is smart contract-driven with no need for a fiat backup.
On the score of the above, where do you stand?