Why Argentines are switching from dollars to stablecoins like DAI

Why Argentines are switching from dollars to stablecoins like DAI - DAI stablecoin 1024x768In Argentina, the US dollar has long been the most sought-after foreign currency. But for the past few days, people have been talking about DAI, a stablecoin issued by MakerDAO.

The weight loses value and the DAI conquers Argentina

DAI's volume has already grown at least six times this year, according to information provided by Argentine cryptocurrency exchanges SatoshiTango, Decrypto and Ripio, and it is tradable on Bitcoin Pro. Faced with a devaluation of the peso from $ 0,02 to $ 0,006 in just 18 months and an annual inflation rate of more than 30%, Argentines are looking for ways to safeguard their savings.

But because they can only buy up to $ 200 a month in dollars through official channels - with an additional 65% fee over the official listing - some Argentines are turning to stablecoins like DAI.

“The adoption of DAI has become popular because, being a stablecoin and having a quotation linked to the US dollar, many Argentines have decided to acquire it as an indirect form of the dollar,” said cryptocurrency exchange Buenbit.

All of this is happening in the midst of a global cryptocurrency boom in Argentina, with cryptocurrency exchanges experiencing record growth this year. Sebastian Serrano, CEO of Argentine cryptocurrency exchange Ripio, said the exchange's stablecoin trading volume grew 20-fold in 2020.

Why DAI

DAI is a decentralized cryptocurrency built on Ethereum pegged to the value of the US dollar (USD) at a 1: 1 ratio via what is known as the Dai Stablecoin Maker (MKR) system. The cryptocurrency collateral, displayed publicly on the Ethereum blockchain, keeps the value of DAI stable, unlike other popular stablecoins whose value is backed directly by USD.

Although many stablecoins have caught on in Argentina, DAI has distinguished itself as a star in the local market. And that success, according to major players in the crypto world such as Serrano, Ripio and Bari, SatoshiTango, is partly explained by the initial relationship that MakerDAO built with the Latin American crypto ecosystem in 2018.

Buenbit started offering DAI in November 2018, when Ripio also included that stablecoin, while it added USDC in August of this year. SatoshiTango, for its part, first made DAI available in March and then merged USDC in August.

Mariano Di Pietrantonio, marketing manager of MakerDAO, the foundation that created DAI, says: “This world has come closer and closer to trading and short-term speculation. But we have positioned DAI as a savings tool, a more concrete proposal ”.

In Argentina, cryptocurrency exchange Bitso recorded a trading volume of 2,3 million DAI in November, while its Mexican business, where the company has 10 times as many customers, counted 883.215 DAI in the same month. according to the information published by the company.

Bitso Alpha director Eduardo Arenas said Argentina has a much higher sophistication in cryptography than any other Latin American country, which helps local people integrate DAI more easily.