Dai and and its companion coin Maker were the first cryptocurrency to gain popularity as a decentralized finance system. In addition to being a cryptocurrency, it provides an overcollateralized loan and repayment system.
Dai (market symbol DAI) is a stablecoin that pegs its value to the United States dollar (USD) through an automated system of smart contracts on the Ethereum blockchain. The governance token Maker (MKR) serves as a governance token allowing owners to vote on development and adjustments to the system, and, of course, serves as an investment instrument.
Maker is also used to keep the Dai's value constant. If Dai's price drifts, auctions are held where Dai is bought for Maker, or vice versa, as needed, and the coin spent in the auction is then 'burned' (destroyed). This has been very effective in maintaining a stable Dai price overall, although when the markets went crazy at the start of the Covid-19 pandemic the process failed, and the Dai drifted up to $1.11.
Dai, meanwhile, is primarily used for taking out loans. If you need some liquid assets, and have some Ethereum (for example) that you do not want to sell, you can take out a loan against your Ethereum (150 ETH will get you a loan of 100 Dai). Once you pay back the loan (with interest), your ETH is released back to you, and everyone is happy. If you default on the loan you loose your ETH, and if the price of ETH collapses the loan is automatically liquidated.
Dai is maintained and regulated by MakerDAO, a decentralized and autonomous organization managed through the Maker token system.