Savings Dai
Crypto Overview
Purpose and Utility
Savings Dai (SDAI) is an ERC-20 token that represents Dai tokens deposited into the Dai Savings Rate (DSR) contract. When users deposit DAI into the DSR, they receive SDAI tokens which automatically accumulate yield based on the current DSR. The protocol automatically reinvests the earned yield, increasing the redemption value of SDAI over time.
Business Model
SDAI functions as an automated yield-bearing token within the MakerDAO ecosystem. The underlying mechanism involves users depositing DAI and receiving SDAI tokens that appreciate in value over time through the DSR. The yield comes from protocol revenue and stability fees charged to vault users in the MakerDAO system.
Real-World Adoption
SDAI has gained significant adoption within the DeFi ecosystem, with over $2.5 billion worth of DAI currently deposited in the DSR system as of early 2024. The token is integrated with various DeFi protocols and can be used as collateral in certain applications.
Platform Development
SDAI is part of the larger MakerDAO ecosystem, which maintains active development and regular updates. The protocol's code is open-source and has undergone multiple security audits.
Token Distribution and Governance
SDAI tokens are minted when users deposit DAI and burned when they withdraw. There is no pre-mine or token allocation to founders - the supply is purely determined by user deposits.
Sharia Considerations
The primary concern from an Islamic finance perspective is that SDAI's core function involves earning yield on deposits, which could be considered a form of riba (interest). The yield mechanism, while automated and derived from protocol fees, still represents a guaranteed return on deposits, which is problematic from a Sharia perspective.
Crypto Impact
To assign a comfort level investing in Savings Dai from a halal perspective we need to determine whether it has a net positive or negative impact.
Towards this end, the table below is used to tally all the positive and negative considerations our members can think of related to Savings Dai.
If you don’t see something that should be listed, positive or negative, feel free to submit your own contribution using the button “Contribute”.
We will review your contribution for accuracy before publication.
Importantly, you can review listed contributions and vote on which one you think has the greatest impact, positive or negative.
You only have one vote per asset so use it wisely.
You can change your vote if you change your mind.