{"id":15754,"date":"2023-04-14T22:25:14","date_gmt":"2023-04-14T22:25:14","guid":{"rendered":"https:\/\/www.bitnovo.com\/blog\/how-to-mine-dai-is-it-possible\/"},"modified":"2022-10-02T21:49:35","modified_gmt":"2022-10-02T21:49:35","slug":"how-to-mine-dai-is-it-possible","status":"publish","type":"post","link":"https:\/\/www.bitnovo.com\/blog\/en\/how-to-mine-dai-is-it-possible","title":{"rendered":"How to mine DAI, is it possible?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Alternar tabla de contenidos\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/how-to-mine-dai-is-it-possible\/#why_cant_i_mine_dai\" >Why can&#8217;t I mine DAI?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/how-to-mine-dai-is-it-possible\/#what_does_it_mean_to_mine_a_cryptocurrency\" >What does it mean to mine a cryptocurrency?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/how-to-mine-dai-is-it-possible\/#how_are_new_dai_units_created\" >How are new DAI units created?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/how-to-mine-dai-is-it-possible\/#issuing_dai\" >Issuing DAI<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/how-to-mine-dai-is-it-possible\/#the_future_of_dai\" >The future of DAI<\/a><\/li><\/ul><\/nav><\/div>\n<span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Tiempo de lectura:<\/span> <span class=\"rt-time\"> 5<\/span> <span class=\"rt-label rt-postfix\">minutos<\/span><\/span><p><span style=\"font-weight: 400;\">The title of this article reproduces a question that we regularly receive through our various channels of contact with Bitnovo users. The answer is simple and concise: <strong>it is not possible to mine DAI.<\/strong><\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, in order to eliminate any doubts and clarify the issue as much as possible, in this article I will explain the reasons why it is not possible to mine DAI and I will go over the process by which you can create new DAI units.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"why_cant_i_mine_dai\"><\/span>Why can&#8217;t I mine DAI?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The method by which new DAI are issued or created is extremely different from the process applied to mining cryptocurrencies. First and primary, DAI is a decentralized, over-collateralized stable coin <strong>whose management and creation is handled exclusively by Smart Contracts.<\/strong><\/span><\/p>\n<p><span style=\"font-weight: 400;\">It is likely that the previous sentence may generate more doubts than certainties, but throughout the reading, I commit myself to eliminate any kind of confusion so that you will perfectly understand <strong>how each new DAI unit is created.<\/strong><\/span><\/p>\n<p><span style=\"font-weight: 400;\">Before launching into the wonderful world of smart contracts that manage the mechanism by which new DAI are issued, it is necessary to shed some light on cryptocurrency mining.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"what_does_it_mean_to_mine_a_cryptocurrency\"><\/span><b>What does it mean to mine a cryptocurrency?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><strong>The blockchain world is divided into 2 groups. On the one hand, there are the networks that achieve their consensus through the \u00abProof of Stake\u00bb system, while on the other hand, there are the chains that achieve it through \u00abProof of Work\u00bb.<\/strong><\/p>\n<p><strong>In this second group is where mining exists. The process of validating transactions and creating new blocks in this type of network ends with the creation of new coins and is called mining.<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">As you are used to reading in this blog, there is nothing better than an example to shed light on an issue. Let&#8217;s know about mining, by means of the first cryptocurrency in history.<\/span><\/p>\n<p><strong>Transactions within the Bitcoin network are validated by miners. The task they continually perform is as follows:<\/strong><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><strong>They take the transactions made by users, validate them and sort them into a block.<\/strong><\/li>\n<li style=\"font-weight: 400;\"><strong>When they have a block, they use their computer equipment to try to solve a highly complex mathematical problem by throwing a series of numbers at random.<\/strong><\/li>\n<li style=\"font-weight: 400;\"><strong>The miner who solves the problem, signs the block and adds it to the Bitcoin blockchain.<\/strong><\/li>\n<li style=\"font-weight: 400;\"><strong>Mining occurs in the first transaction of the new block. In it, the miner creates a transaction to himself an amount of BTC, currently 6.25, and in this way new bitcoins are created.<\/strong><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Mining is therefore the process by which, on chains governed by the \u00ab<a href=\"https:\/\/www.bitnovo.com\/blog\/que-es-proof-of-work-el-protocolo-de-consenso-de-bitcoin\/\">Proof of Work<\/a>\u00bb consensus, miners create or issue new cryptocurrency through the computational power of their mining equipment and mathematical problem solving.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You may be wondering, but doesn&#8217;t <a href=\"https:\/\/www.bitnovo.com\/blog\/que-es-y-como-funciona-ethereum-eth\">Ethereum<\/a>, until the \u00ab<a href=\"https:\/\/www.bitnovo.com\/blog\/hasta-cuando-podra-minarse-eth\">Merge<\/a>\u00bb takes place, continue to be a \u00abProof of Work\u00bb chain? This is correct. But it is important to clarify, that on the network capable of supporting the largest smart contracts in terms of market capitalization, only the native currency, <a href=\"https:\/\/www.bitnovo.com\/blog\/como-minar-ethereum-guia-completa-para-novatos\">ETH, can be mined<\/a>.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">At the time of Ethereum&#8217;s creation, this mechanism, similar to bitcoin, was established to give birth to new units of ETH. DAI, on the other hand, is the fruit of Ethereum&#8217;s biggest creation, <a href=\"https:\/\/www.bitnovo.com\/blog\/que-es-un-contrato-inteligente\">smart contracts<\/a>. Therefore, mining does not come into the picture here, but the method for issuing DAI is the one we will discuss below.<\/span><\/p>\n<p>&nbsp;<\/p>\n<div id=\"image_593533124\" class=\"img has-hover x md-x lg-x y md-y lg-y\">\n<div class=\"img-inner dark\">\n<figure id=\"attachment_15275\" aria-describedby=\"caption-attachment-15275\" style=\"width: 768px\" class=\"wp-caption alignnone\"><img fetchpriority=\"high\" decoding=\"async\" class=\"size-full wp-image-15274\" src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2022\/08\/002-7.jpg\" alt=\"How to mine DAI, is it possible?\" width=\"768\" height=\"526\" srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2022\/08\/002-7.jpg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2022\/08\/002-7-300x205.jpg 300w\" sizes=\"(max-width: 768px) 100vw, 768px\" \/><figcaption id=\"caption-attachment-15275\" class=\"wp-caption-text\">DAI, the stable currency managed exclusively by Smart Contracts<\/figcaption><\/figure>\n<p>&nbsp;<\/p>\n<\/div>\n<\/div>\n<h2><span class=\"ez-toc-section\" id=\"how_are_new_dai_units_created\"><\/span>How are new DAI units created?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">So, now we know what <a href=\"https:\/\/www.bitnovo.com\/blog\/que-es-dai-la-guia-completa\">DAI<\/a> is and why it is not a mineable cryptocurrency. But how are units of this stable currency created? Let&#8217;s review, once again, the process.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As I mentioned earlier, DAI is a decentralized <a href=\"https:\/\/www.bitnovo.com\/blog\/stablecoin-que-es\">stablecoin<\/a>. This qualifier, about which I have written so much in this blog, indicates that there is no centralized entity behind the creation and management of DAI. DAI is managed by <a href=\"https:\/\/www.bitnovo.com\/blog\/que-es-makerdao-hito-en-las-finanzas-descentralizadas\">MakerDAO<\/a> and its creation is materialized through a series of Smart Contacts. Let&#8217;s see how they have been configured.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"issuing_dai\"><\/span><b>Issuing DAI<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><strong>To create new DAI units, we only need to go to any of the sites enabled for this purpose, one of the most used being the <a href=\"https:\/\/oasis.app\/\">Oasis<\/a> website. Once there, the next step is to open a \u00abvault\u00bb.<\/strong><\/p>\n<p><strong>In this \u00abvault\u00bb, we will deposit our collateral in the form of a guarantee and we can, issue new DAI units. Decentralization is evidenced by the lack of interaction with an entity to issue new DAI. From an Ethereum wallet, after completing simple steps, new DAI&#8217;s are created.<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">As a not minor detail, our collateral must have a 125% ratio with the DAI we have issued, in order to guarantee the DAI&#8217;s parity with the dollar by means of an over-collateralization. <strong>Let&#8217;s see an example:<\/strong><\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><strong>Let&#8217;s suppose that, after logging into Oasis and connecting my wallet, I create a \u00abvault\u00bb.<\/strong><\/li>\n<li style=\"font-weight: 400;\"><strong>In this vault, I deposit the equivalent of $125 in ETH.<\/strong><\/li>\n<li style=\"font-weight: 400;\"><strong>To sustain a ratio of 125%, the maximum amount of DAI to be issued is 100<\/strong><\/li>\n<li style=\"font-weight: 400;\"><strong>In the event that issuing 100 DAI and the price of ETH falls, generating a decrease in the value of my collateral I have two options:<\/strong>\n<ul>\n<li style=\"font-weight: 400;\"><strong>Return part of the DAI issued<\/strong><\/li>\n<li style=\"font-weight: 400;\"><strong>Integrate more collateral, reestablishing the ratio<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">In the event that neither action is taken, part of my collateral will be lost through an automatic action carried out by the Maker contracts, known as liquidation.<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><strong>The magic of DAI and MakerDAO lies in the fact that throughout this process, the user has not had to interact with anything other than smart contracts.<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Now, what happens if we want to recover our collateral? Simple, we return our DAI and the Maker contracts will enable the withdrawal of the DAI.<\/span><\/p>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div><\/div>\n<div id=\"image_706478518\" class=\"img has-hover x md-x lg-x y md-y lg-y\">\n<div class=\"img-inner dark\">\n<figure id=\"attachment_15280\" aria-describedby=\"caption-attachment-15280\" style=\"width: 768px\" class=\"wp-caption alignnone\"><img decoding=\"async\" class=\"size-full wp-image-15279\" src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2022\/08\/003-8.jpg\" alt=\"\u00bfC\u00f3mo se puede minar el DAI, es posible?\" width=\"768\" height=\"526\" srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2022\/08\/003-8.jpg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2022\/08\/003-8-300x205.jpg 300w\" sizes=\"(max-width: 768px) 100vw, 768px\" \/><figcaption id=\"caption-attachment-15280\" class=\"wp-caption-text\">MakerDAO Vaults, a standard in the crypto ecosystem<\/figcaption><\/figure>\n<\/div>\n<\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<h2><span class=\"ez-toc-section\" id=\"the_future_of_dai\"><\/span><strong>The future of DAI<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">DAI is a wonderful creation born from the very community formed around Ethereum and, to a large extent, enabled the explosion, in terms of adoption and development of decentralized applications, known as \u00abDeFi Summer\u00bb.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There is little doubt that DAI is a product that should be looked after by all of us who are active in the crypto world. When we talk about DAI, we refer to a standard for the creation of stable decentralized currencies.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As major analysts in the crypto world have warned, decentralization faces stormy times in which it will have to fight big battles. Clearly, these wars will need DAI as the standard bearer for decentralization.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p><span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Tiempo de lectura:<\/span> <span class=\"rt-time\"> 5<\/span> <span class=\"rt-label rt-postfix\">minutos<\/span><\/span>The title of this article reproduces a question that we regularly receive through our various channels of contact with Bitnovo users. The answer is simple and concise: it is not possible to mine DAI. However, in order to eliminate any doubts and clarify the issue as much as possible, in this article I will explain [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":15270,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-15754","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-criptomonedas"],"_links":{"self":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/posts\/15754","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/comments?post=15754"}],"version-history":[{"count":0,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/posts\/15754\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/media\/15270"}],"wp:attachment":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/media?parent=15754"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/categories?post=15754"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/tags?post=15754"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}