The MakerDAO ecosystem involves two stablecoins – Sai and Dai. Sai stands for Single-Collateral Dai while Multi-Collateral Dai is referred to as "Dai." This change was brought about by the enabling of Multi-Collateral Dai (MCD) in the MakerDAO system, in November 2019. Sai tokens run under the ticker symbol SAI.
This guide will explain what Sai is all about, the purpose it is designed for, the team behind it, the way it works, and the various uses and applications.
What Is Sai Designed For?
It is no secret that MakerDAO attempted a very different dual token ecosystem from its competitors. The Sai token may be a stablecoin with its value pegged to $1. However, the only way 1 SAI can maintain its value is through MKR. SAI was designed by the MakerDAO team to keep everything within network parameters while migrating to a new setup.
It is important to differentiate between SAI, DAI, and MKR while understanding the purpose behind Sai. MKR offers the level of decentralization required by MakerDAO to be set apart from its competitors. Sai, on the other hand, is the stablecoin itself. However, Sai is only Single-Collateral Dai as opposed to Multi-Collateral Dai, which is now referred to as DAI under the new Multi-Collateral Dai (MCD) model.
Who Is The Team Behind Sai?
As explained earlier, SAI is an inherent aspect of the MakerDAO ecosystem as a whole. The idea for creating a truly decentralized dual token stablecoin ecosystem was formed in 2015.
Rune Christensen, who was the company’s founder and CEO, was primarily focused on the creation of a decentralized stablecoin. The project was finally launched in 2018 after being in development for almost 3 years. SAI and MKR tokens were simultaneously launched in 2017.
How Does Sai Work?
SAI tokens were backed only by Ethereum until very recently. However, now there are other cryptocurrencies backing it. Multi-collateral DAI (MCD) was introduced on November 19, which categorized all existing DAI as single collateral DAI that came to be known as Sai (SAI) and multi-collateral Dai (DAI).
Before understanding the workings of SAI, it is important to understand how multi-collateral Collateralized Debt Positions (CDPs) work. Multi-collateral Collateralized Debt Positions allow for collateral value to existing in several tokens. Dai Savings Rate (DSR) accompanies the introduction of multi-collateral and in effect makes it possible. Users can basically earn money as savings by simply holding DAI tokens.
The Maker protocol is run by the MKR token. This, in turn, controls smart contracts that help power SAI tokens. Users can now deposit their collaterals in smart contracts with the help of CDPs. For instance, CDPs can allow a user to generate SAI tokens by using ETH as collateral. The holder can always withdraw the collateral that was deposited.
What Are Current and Future Applications of Sai?
Currently, SAI is used to hold the value of collateral through CDPs. However, in the future SAI shall be wound down and users would be asked to migrate to DAI. There have been many notable partnerships between MakerDAO and other companies where SAI is concerned. This has led to its overall growth and has helped MakerDAO attain brilliant heights.
The collaboration was announced between SAI and Thailand-based project OmiseGO (OMG). OMG is a project that involves working on pioneering banking solutions. This collaboration allowed the SAI stablecoin to become available on the OmiseGO (OMG) network.
Another notable partnership of SAI is with Request Network. This project is focused on building accounting/invoicing solutions. In fact, the partnership allowed SAI to be one of the first ERC-20 tokens, which were made available on the Request Network (REQ).
MakerDAO is currently working with Wyre, which is a blockchain money transfer company. This collaboration is said to allow for compliant and fast conversions of fiat currencies into DAI. The project also entered a partnership with Digix (DGX), which is a well-known and highly popular gold-backed token project. DGX is currently collateral for the SAI stablecoin and is expected to act as the collateral for DAI as well.
There are numerous projects releasing stablecoins in a bid to make holding and transacting with crypto assets safer for the general public. MakerDAO’s ecosystem is considered to be one of the better ones since it implements a reliable mechanism, backed by cryptocurrencies, which helps in maintaining the value of its stablecoin at $1. In fact, it is said to be a much safer option than its fiat-backed counterparts.
Sai was a great stablecoin initiative and it is expected that Dai shall be the same in the future as well.