Sai (SAI)

SAI was created when users locked Ether-based collateral into collateralized debt positions, later known in Maker terminology as vaults, and generated SAI as a loan against that collateral. The system used incentives, liquidation rules, stability fees, and arbitrage to encourage the token to trade near its dollar target. If demand pushed SAI above the peg, users had an incentive to mint and sell more. If it traded below the target, repayment and market activity helped reduce supply and support the price.

Unlike centrally issued stablecoins, SAI did not depend on a bank account holding one dollar for every token. Its backing came from crypto collateral held in Ethereum smart contracts, making it one of the first widely used examples of decentralized finance infrastructure. Users could transfer it like any ERC-20 token, integrate it into Ethereum applications, and use it without a traditional intermediary.

MakerDAO later introduced Multi-Collateral Dai, expanding collateral beyond the original ETH-only system and gradually moving activity away from SAI. Even so, SAI remains historically important because it demonstrated how decentralized lending, collateral management, and algorithmic incentives could be combined to create an on-chain stable asset.