Today I wanted to add to my investing journal with an entry about a new strategy that I have been using. I have begun allocating between 1-10% of my crypto holdings to the price stable Dai coin when markets are roaring hot. This then allows me to jump back into the market and increase my stack of coins when the inevitable dips happen. I leverage my Dai up as the market increases and leverage it down as the market decreases - it acts as a quick, cheap and convenient hedge against my crypto holdings.
Dai is a price stable coin that is tied to $1 US Dollar https://coinmarketcap.com/currencies/dai/ The idea of Dai is to allow people to remain in crypto (avoid cashing out to fiat) but to avoid any of the parabolic ups and downs of the crypto market. It can also be useful if you are doing a transaction (ie: buying a meal at a restaurant) and the restaurant is worried that the price of some crypto might go down 20% by the time that you pay your bill or when they need to pay their suppliers, or if you need to send a set amount of money to someone or family overseas.
Dai sounds familiar to the much maligned "Tether" coin, but it is far different. For one thing, it is backed by ethereum or crypto that is deposited to secure its value. Dai can be obtained in two ways:
(1)Dai can simply be obtained by trading for it on an exchange and the price is tied to $1USD; or
(2)Dai can be created by anyone who wishes by them locking up ether/etc and getting Dai in return. They can repay the Dai later (plus some interest) and get their Ether back. By doing this, the creator can keep their ether (not have to trade out of it) and also gain extra leverage to use (if you ask me this is a much better and cheaper way to gain leverage than using Salt lending etc. as well).
Because Dai is just now starting out it isnt on many exchanges yet, which is why its market volume is not that high yet. But with backers like Olaf Carlson-Wee's Polychain behind it, more exchange listings appear to be a matter of when, not if. For now, I have been using the Bibox exchange and I have found it to be a reliable and responsive exchange (caveat, as with any exchanges, the golden rule is never keep ANY coins on the exchange and USE 2FA and a different email/phone number as well - keeping a separate burner phone is a good idea for security).
I have also purchased some of the Maker coin https://coinmarketcap.com/currencies/maker/ which is the Dai's governing coin and which is price speculative and dependent on success of the Dai coin.
[This is simply a trade journal that I keep to chronicle my own trading. It is not advice, I am not an advisor. Crypto trading is inherently risky].