xDai
xDai is the native currency of the Gnosis Chain. It is also a derivative of the Dai stablecoin and is pegged to the US Dollar
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- Asset Type: Native
- Fully Diluted Valluation: $79.3M
- Total Supply: 78,847,386
- Volume (24H): $39K
- ATH: $9.92 (01/29/2023)
- ATL: $0.18 (09/09/2022)
xDAI is a low-cap asset that represents the protocol`s native governance or utility token. This asset is exposed to the underlying risks of xDai Bridge, a protocol rated as Watch out.
xDAI is a stablecoin that trades within 100bps of its peg to USD, making it a somewhat volatile store of value.
xDAI has an uncapped supply but has inflation control or burn mechanisms in place. xDai is fully collateralized by DAI locked in the xDai Bridge on the Ethereum Chain, and is thus a stablecoin.
xDAI is a stablecoin that trades within 100bps of its peg to USD, making it a somewhat volatile store of value.
What is the Gnosis Chain?
Gnosis Chain (previously xDai Chain) is an Ethereum-based sidechain that uses its own Proof-of-Stake (PoS) consensus model. The purpose of Gnosis chain is to significantly improve the user experience through lower gas fees and faster transaction speeds. Gnosis Chain is powered by a two-token system consisting of the GNO token and the xDAI token. GNO is the native blockchain token that is used to power the blockchain network and secures the chain through user staking and governance. xDAI is a stablecoin pegged to DAI that is used to pay for transaction fees on Gnosis Chain. The use of a stablecoin as the native currency for gas fees is preferred since it helps keep transaction fees low and also serves as a reliable form of payment as it is pegged to 1 USD.
How is xDAI minted?
Users cannot directly buy xDAI. The only way to mint new xDAI is by bridging DAI from the Ethereum mainnet through the xDai bridge. The bridge will lock the DAI in a smart contract on Ethereum and mint an equivalent amount of xDAI on the user's wallet address on Gnosis Chain. To redeem xDAI back for DAI is the reverse process. Users input the amount of xDAI to be burned through the xDai bridge and the equivalent amount of DAI will be released on Ethereum.
Risks of xDAI
The main risk of holding xDAI is that users are exposed to the xDai bridge. The bridge uses a trusted set of validators (4/6 multisig) to confirm deposits for a lock-and-mint mechanism. Token locked in the bridge contract are also redeposited into third-party DeFi platforms like Compound to earn additional interest, which exposes users to additional risks of those protocols.
