I am interested in the Dai stable coin and have seen multiple different explanations of how the coin balances and pegs to the $1. One said it was to do with the increase or decrease in interest rates to bring the price up or down(eg. If interest goes up then demand goes down and the price falls and vice versa). The other said it was to do with supply and demand change due to people buying cheaper and selling higher for a profit(eg. when the value of dai is higher than dollar people sell for a profit, which increases supply and so the value goes down; when the value is low people buy which drives price up as supply decreases). Which of these is correct?
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4Does this answer your question? How does the DAI keep its peg to a USD dollar? – clement Oct 14 '20 at 8:11
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2Or ethereum.stackexchange.com/questions/63783/… ? – eth♦ Oct 25 '20 at 9:29
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Thank you. They both answer my questions, although the second link(@eth) helped explain why interest rates aren't used to stabilise the DAI. – Thomas Stokes Dec 1 '20 at 11:03
