Stablecoins are one of the most prominent trends in the crypto market. These coins are generally pegged to fiat currencies and maintain an equal ratio, which is 1:1. However, the existing problems of many stablecoins are the slow speed of the transactions and the high fees. Knowing these issues, many regular users are stepping away from these coins and looking for better options.
In this case, Gnosis Chain and its native coin xDai are stepping into the game. This stablecoin is different from other coins because it guarantees low fees, speedy transactions, and a high level of security.
In this article, we will touch on the blockchain Gnosis Chain with its stable token xDai, while providing you with essential information about it, including its pros and cons. In addition, we explain to you where and how you can buy this token with ease. But let us start with the beginning and give you an xDai definition and extend your knowledge about Gnosis Chain (xDai Chain earlier).
As mentioned, xDai belongs to stablecoins. It is pegged to the US Dollar and is a derivative of the cryptocurrency DAI (will be explained later in the article), a stablecoin whose price is pegged to the US Dollar as well. The cost of performing a transaction with xDai is $0.000021 USD. Such a transaction takes up to five seconds. The stability of xDai allows for predetermined fees that are extremely low compared to many other blockchains. Nevertheless, it is worth answering one more question - what is xDai chain?
Gnosis Chain (previously, it was called xDai Chain) was created as the world’s first stable dollar blockchain and went live in October 2018. It is designed for low-cost, anonymous, and speedy transactional payments with a fixed fee.
It has a dual-token model using a stablecoin called xDai for transactional payments and a second token called STAKE for consensus based on a new delegated Proof-of-Stake (PoS) consensus model called PoSDAO, which is implemented by DAO, as you might have guessed.
STAKE is a multi-chain token designed to protect the payment level. Stacking allows block producers (validators and delegates) to ensure transaction consensus and receive incentives for fair block production. STAKE is not required for everyday chain transactions or users. It is necessary only for consensus providers. STAKE is also an unstable token whose value is determined by the market.
Tokens are purchased on the main network and then transferred to the xDai sidechain through the DAI-xDai bridge for transaction tokens; OmniBridge transfers data between chains.
The xDai Chain has three ways to get stacking fees. These ways include transaction fees paid to xDai, STAKE fees for checking blocks, and commissions. Previously, users could also earn interest in CHAI by blockchain DAI in a bridge.
It is easy to understand the logic of this model - xDai for stable transactions, STAKE for protocol protection. The dual-token model was created to maintain xDai’s stable transaction capacity while supporting robust incentives for participants (validators and delegators).
xDai, a stable native coin, allows users to predict fees and conduct transactions where prices will not fluctuate by a large margin. This is ideal for everyday payments.
To create incentives for validators through token issuance, the xDai chain uses STAKE whose price is determined by the market. While this token is subject to volatility, it is not a transaction-based asset. Like other tokens, the price is determined by supply and demand in the Ethereum ecosystem.
After getting to know the xDai definition, it is the right time to learn more about DAI. Unlike most stablecoins, DAI is a decentralized and stable currency backed by Ethereum coins frozen in a smart contract.
The token can be used for settlement or funds transfer. The unused portion of the coins is burned. According to the developers, this leads to rate stabilization due to the continued balance of supply and demand.
xDai runs on the Ethereum sidechain (the Gnosis blockchain). ERC-20 standard DAI tokens become stablecoins in the xDai blockchain. They can be returned to the Ethereum blockchain at any time.
xDai uses the TokenBridge smart contract to create tokens. Such technology is called cross-chain bridging. The exchange of DAI to xDai goes like this:
Like every cryptocurrency, xDai has its strengths and weaknesses. But, let us consider the beneficial sides of the token first.
Advantages of xDai
Disadvantages of xDai
To answer this question properly, it is worth indicating that every blockchain, as well as any stablecoin, may include risks. However, the stablecoin xDai has proven its reliability in the market and among many users. The first hint that this token is safe lies in its belonging to the group of stablecoins. It is pegged to the US Dollar and maintains the ratio of 1:1.
Secondly, the stablecoin implements the stacking token STAKE, which is multi-chainable and is used by several validators to make sure the chain is safe.
And finally, the officials of xDai state that Gnosis Chain goes through regular examinations and inspections. It means that the chain owners want to make the chain and its token as secure as possible.
As with every stablecoin, xDai can be used in different ways. For instance, you can easily send this coin from one wallet to another or receive this cryptocurrency in your wallet. What is more, you can store this token in your wallet without worries that its rate will go down, as it is a well-known practice with high-volatile coins, like Bitcoin (BTC), Litecoin, (LTC), etc.
One of the essential ideas of Gnosis Chain and its native stablecoin xDai is to solve the problem of high transaction fees and slow transactions. While other stablecoins charge their users comparatively high fees, xDai makes it possible to save money on these fees. Thus, the answer is positive, and it is profitable to use xDai in this regard.
What is more, it is pegged to the US Dollar and is secured by DAI so that users should not have doubts and worries about the stability of its pegged rate.
Some time ago, it was complicated to purchase this token because you first needed to buy DAI for fiat money and, after that, convert the bought crypto into xDai. However, there is an easy way to buy xDai (even without the converting operation). On our website, you can make a purchase of xDai in the needed quantity so quickly. The purchasing process consists of three simple steps (users who already deal with us can purchase xDai even faster).
Buying xDai by the Genesis chain at Utorg is easy and without additional steps (to buy one token and then convert it to the needed one), and it takes several minutes of your time to reach your aim and get the xDai tokens.
xDai is a young project. It is essentially an analog of the Lightning Network for Ethereum with a native stackable coin (xDai) and the ability to make money on stacking.
A proprietary blockchain allows xDai to conduct fast transactions with low fees. Users pay for transactions in xDai, not Ethereum.
Stablecoin solves the problems of collateral and commissions. Due to the link to DAI, xDai tokens cannot be issued without collateral. xDai operates on a separate blockchain: its transactions do not compete with Ethereum transactions and cost less.
1. Is xDai a blockchain?
No, it is a stablecoin pegged to the US Dollar with a ratio one by one, which functions on the Gnosis blockchain (previously - xDai Сhain).
2. Are xDai and DAI the same?
The only common thing that these cryptocurrencies have in common is the fact that they both belong to the same group of coins - stablecoins. But, xDai is a derivative of the cryptocurrency DAI and is pegged to it. Thus, xDai and DAI are not the same.
3. Is xDai secure?
Absolutely! The stablecoin xDai is completely secured. It operates on Ethereum’s sidechain Gnosis, which is regularly audited by third-party security firms.
4. What is xDai on the Gnosis chain?
xDai is a stablecoin pegged to the US Dollar in the Gnosis Chain ecosystem and is a derivative of DAI, another cryptocurrency on Ethereum's blockchain. It is used for processing different crypto operations, like buying, selling, sending, and receiving this crypto, as well as for the purpose of staking and maintaining the Gnosis Chain network.