Tokens are digital currencies or cryptocurrencies that are not independent (they do not have their own blockchain) but they live or are built on another blockchain. They are unique outlays of more broad smart contract platforms like Ethereum that allow the users to create, distribute, and manage tokens.

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Blockchain technology is not cheap to such extent where everybody out there can develop, so many people who cannot afford it or people who thinks that their project is not broad enough to run it's unique blockchain can always take it to those blockchains like Ethereum that can accept it through Smart contracts.

When a project is built on another blockchain, the developers of the project will still be able to issue a native digital currency that will be used in that Application, this digital asset is known as a "Token".

Tokens and the blockchains they are built on.

• Maker (MKR) - Ethereum blockchain.
• Golem (GNT) - Ethereum blockchain.
• Komodo (KMT) - Ethereum blockchain.
• News crypto (NWT) - Stellar blockchain.
• Glitzkoin (GTN) - Stellar blockchain.
• Hello World - Tezos blockchain.
• DAI - Ethereum blockchain.

THE DIFFERENCE BETWEEN A TOKEN AND A COIN.

Coins are cryptocurrencies that are built on their independent blockchain network. Bitcoin (BTC) is a very popular example of a coin. While Tokens refer to cryptocurrencies that do not have their own independent blockchain network, but are built on another blockchain.
coins are created to serve almost the same purpose as the fiat currencies which is the transfer of value. In the cryptocurrency world, digital coins enable the receiving or making of payments in a blockchain. But a token always possess additional powers appart from being a medium of payment, Any developer can create digital tokens to fulfill specific functionalities based on the project embarked upon by the developer.
Some tokens are awarded to the holders for their activities in a Decentralized Application and in some cases, the holders of the token will use the token to contribute to the decision making of the project.

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THE DIFFERENT CATEGORIES OF TOKENS.

Utility tokens

Utility tokens are those tokens that are Incorporated into an existing protocol on the blockchain and they are used to access the services of that protocol. These types of tokens are not developed for direct investments, but it can be used for the payment of
services that are on that ecosystem.
The the connection or association between a platform and its utility token is synergistic, because the platform wilk provide security for that utility token while the utility token will provide the network activity needed for the strengthening of the economy of that platform. Dai is an example because is integrated into Axie Infinity which is a digital-pet platform which has an economy that is owned by the players, iy provide the players with a stable in-game currency. Then the other projects like the Cryptocup now leverage Dai stability in order to give the users a better experience.

Security tokens.

Security tokens are those tokens that are designed to serve as direct, on-chain representations of the real-world securities or tokens. They serve a similar purpose like
projects on a blockchain and/or digital assets.
For instance, investors on the Meridio platform can easily trade tokens representing real estate shares and they can pay in Dai.
In a case where a token is representing the ownership of an asset that is not on chain (off-chain) such as real estate, an equipment, a payable invoice, or any business similar to the share of stock, the value of the security token is directly tied to the value of the asset.

Equity Tokens.

Equity tokens are those tokens that function like a traditional stock asset because the holders of the equity token possess some form of ownership in their investments. The amount of their tokens represent how much ownership percentage they possess. In most cases, equity tokens represent an asset, or property, of a third-party .

Non-Fungible Tokens.

Non-Fungible Tokens are tokens that we can use to represent the ownership of unique items.
They allow us to tokenise things like art, collectibles, or anything digital at all.
NFTs are those one-of-a-kind or unique assets in the digital space that can be bought or sold like any other piece of properties, but they do not have any tangible form of their own. So, a Non-Fungible token can be said to be certificates of ownership for virtual or digital assets.

DAI AS A TOKEN.

DAI is an ERC20 token that is built on the Ethereum blockchain, it is a token and also a stablecoin that is linked or pecked to the value of the U.S. dollar. In order to maintain the stability in its price, DAI’s value is always regulated by MakerDAO which is the Decentralized governance community of the project, While actual DAI stablecoins are produced through its Maker Protocol platform which accepts many other cryptocurrencies as collateral. In most regulated exchanges, DAI can be bought with fiat currencies like the US dollar.

FEATURES OF DAI

Decentralization.

Transactions involving the DAI token does not require any third party permission, so it is known as a permissionless transaction. The DAI token runs on a computer programming code known as a smart contract which is built on Ethereum blockchain. The blockchain together with the code executes the transaction without any bank approval, or delay.

DAI Savings Rate (DSR).

DAI token also has a unique program that generates Interest which is known as the DAI Savings Rate (DSR). This feature allows users to put their idle DAI tokens to work for it to produce a variable interest income over a lockup period. The DAI owner can also deposit his tokens directly into a MakerDAO smart contract. The smart contract has been programmed in such a way that it will automatically add interest to the account. The earnings or the entire investment can be withdrawn at anytime and there is no minimum deposit.

The Maker Protocol.

Maker Protocol is the ground laying system developed by the DAI creator, Rune Christensen. The protocol allows any body in the world to produce the DAI token which is also a stablecoin using a wide range of cryptocurrencies as collateral. Some of the coins and tokens that can be accepted as collateral include Ethereum (ETH), Compound (COMP), USD Coin (USDC) and many more.

AIM OF THE DAI TOKEN PROJECT.

The Dai token is a stablecoin which aims to keep its value the same with one United States dollar (USD) as made possible by the use of an automated system of smart contracts that is built on the Ethereum blockchain.
Another major aim of DAI is to lend or provide the capital for a loan. Users who deposit their Ether (or other cryptocurrencies mentioned earlier that are accepted as collateral ) are able to borrow DAI based on the value of their deposits, then they will receive newly generated Dai tokens.

USE CASES OF DAI

Financial Independence.

For you to take part in the non-crypto financial system, the banks and other financial services providers are always requesting for a lot from aspiring users, including personal data or even proof of good credit, and even minimum deposit amounts. These requirements are always stifling and they do discourage many people. The Dai token and stablecoin allows everyone at any place to access financial services that provide financial freedom irrespective of economic standing.

Generation of DAI.

Everi day, users buy Dai on various exchanges for them to use it in the ways they want to. But some others go to the Maker Protocol and generate Dai Instead of purchasing it. The process is quite simple; The users lock a wide range of collateral in the Maker Vaults, then they generate Dai according to the amount of collateral they locked.
Some business owners generate Dai in order to create an operational capital by hedging the volatility of cryoto's signature while they also keep their funds in the blockchain.

Stability.

The Dai token is also a leading stablecoin, so it offers a lot of stability in the volatile cryptocurrency world. Dai is soft-pegged to the value of one US Dollar and backed by a wide range of collaterals that are locked in Maker Vaults.
Even when the cryptocurrency market is very volatile, Dai will still allow its users to store its value without relinquishing the cryptocurrency space.