DAI is the oldest decentralised stablecoin still in circulation and the only one with a peg record spanning multiple full market cycles. That record is the strongest argument any stablecoin in this category can make.
The stress tests it survived
March 2020: liquidation auctions failed under congestion, leaving bad debt, and the system recapitalised through a governance-run MKR auction. May 2022: Terra collapsed and DAI held. March 2023: USDC depegged, and because DAI was heavily collateralised by USDC, it traded above par as users fled toward it and below as the collateral wobbled — before recovering with the underlying.
The independence question
That 2023 episode is the clearest statement of DAI's central compromise. A stablecoin designed to be independent of banks is significantly backed by a stablecoin that depends on them. The reason is practical — crypto collateral is volatile and capital-inefficient — and the consequence is that DAI's peg partly rests on Circle's balance sheet.
What remains genuinely different
No freeze function on the original DAI token, on-chain verifiable collateral positions, and a governance process that operates publicly. Those properties are real and are why some users still hold DAI rather than USDS.
Who should use it
Users who want a stablecoin without a freeze function and with the longest peg record available, and who understand that its backing is not as independent as its design implies.