Dai refers to the stablecoin that is pegged to the US Dollars. 1 Dai = 1 USD through collaterals that back the stablecoin. When Dai was initially conceived, Ether (ETH) was the sole collateral backing the stablecoin; hence the name Single Collateralized Dai.
On 18 Nov’19, Maker launched a new version of Dai which is collateralized by multiple assets beyond ETH, the Multi-Collateralized Dai (MCD). For clarity, here are the terms used in this article hereon:
Single-Collateral Dai = Legacy Dai = Sai
Multi-Collateral Dai = New Dai = Dai
With this release, we will begin to see other assets forming the collateral for Dai such as other ERC-20 tokens, wrapped Bitcoin tokens, or even tokenized real world assets. The premise for doing this is to diversify the collateral portfolio in order to ensure Dai can remain stable at a lower risk.
Therefore, in order to facilitate the upgrade from Single to Multi Collateral, the Maker team decided to issue a new token in which users who are holding legacy DAI must migrate into.
Although Multi-Collateral Dai comes in the form of a new token, the standardized name proposed by Maker for it would be Dai, and the legacy Dai (single collateral) will be renamed to Sai. Most exchanges and services have generally adhere to this new naming standard.
What are the risks of not doing so?
Moving forward, Multi-Collateral Dai will be the de-facto stablecoin standard maintained by Maker and it is highly recommended that you upgrade your Single Collateral Dai (SAI) to Multi-Collateral Dai (DAI) as soon as possible.
Eventually legacy SAI will be phased out via an Emergency Shutdown. When that time comes, SAI would lose its stability and be pegged to a proportion of ETH that is locked up as collateral.
If you want to ensure that your DAI holdings remain a stablecoin pegged to USD, you should upgrade as soon as possible.
According to Sai2Dai, only 54.25% of Sai have already been migrated to Dai
Step by step guide on how you can migrate SAI to DAI
If you are still holding SAI in your wallet, here is a step by step guide on how you can easily migrate your SAI to DAI in just a few simple steps.
1. Navigate to https://migrate.makerdao.com/ and make sure you have your wallet ready, be it Metamask, Trezor, Ledger, or others.
2. Connect your wallet and proceed. The box will display the number of SAI you have in your wallet, select “Continue” on Single Collateral SAI Upgrade.
3. Enter the amount of SAI that you would like to upgrade to DAI. If you are not feeling comfortable, you can input a smaller amount; otherwise you may click MAX. After that select “Continue”.
4. A “Confirm Transaction” prompt will appear. You will have to unlock your SAI in order for the smart contract to process your migration. Click the “Unlock SAI” switch.
5. You will be asked to sign an Ethereum transaction to allow the MakerDao migration contract to spend your SAI for the upgrade to take place. You will need to pay gas fees and sign a transaction here. Below is the screenshot if Metamask is used.
6. Once you have signed the transaction, wait for the transaction to confirm. You will see a spinner beside “Unlocking SAI”.
7. When the transaction is confirmed, the website should automatically detect that you have confirmed your unlocked SAI and you can proceed to the next step. Accept the terms and continue. If the “Unlocking SAI” spinner never stop, you can try reloading the page.
8. You will be asked to sign one final transaction here. Once that is done, wait for the transaction to confirm.
Yay! And you are done, your migration should be complete and your SAI will be converted to the new DAI which is Multi-Collateral directly into your wallet.
Some exchanges and services may not have upgraded to the new MCD DAI yet (and they may be using the old name DAI to refer to SAI). Always take note of the contract address to be absolutely sure you are interacting with the right contract.
TM Lee is the co-founder of CoinGecko. Purdue University CS 2012 Follow the author on Twitter @tmlee