What is the difference between cDAI and DAI?
The main difference between cDAI and DAI is that cDAI is a tokenized version of the DAI stablecoin, which is a decentralized stablecoin created by MakerDAO.
cDAI is an ERC-20 token that is collateralized by DAI and held in a smart contract on the Ethereum blockchain. This means that when you deposit DAI into the cDAI smart contract, you receive an equivalent amount of cDAI tokens in return. The main advantage of using cDAI over DAI is that it allows users to earn interest on their deposits.
This interest rate is determined by the amount of collateral held in the smart contract, as well as other factors such as market demand for cDAI tokens. Additionally, because cDAI tokens are ERC-20 tokens, they can be used to interact with other decentralized applications (dApps) on the Ethereum blockchain. In contrast, DAI does not offer any interest rate or ability to interact with dApps.
It simply acts as a stablecoin pegged to the US Dollar and can be used for payments and transfers just like any other cryptocurrency.
