Users must spend Ether to send DAI as it works on the Ethereum network. The current fees are close to the all-time high price of the year 2018.
The DAI stablecoin, which maintains parity with the US dollar, gained great popularity in Latin American countries such as Argentina.
Several savers turned to DAI as a store of value due to the devaluation of the national fiat currency, state restrictions to buy US dollars, and a strong campaign by exchanges and some YouTube influencers.
When they want to use the DAI that they have acquired, they learn that they need to have Ether (ETH); the cryptocurrency of the Ethereum network, to send it from their wallets to other addresses.
Fees for DAI Take New Users by Surprise
A user in the Facebook group Bitcoin Argentina said that he had bought DAI on an exchange and transferred the amount to a wallet. He explained that he had to pay a fee in ETH, which he did not have, to pass them to another exchange.
Another member of that group posted that he had downloaded the Exodus wallet and put some DAI there. To withdraw it, he had to pay a fee in ETH. Fortunately for this user, Exodus sent him the ETH to pay the fee and was thus able to solve his problem.
Cases like these frequently happen. This problem adds to the high fees that the Ethereum network currently has.
At the time of writing this article, the average fees on the Ethereum network are 0.00731 ETH (USD 3.20) but they reached 0.01436 (USD 6.29) on August 12th.
Romina Sejas is a member of the team of a cryptocurrency exchange and active DAI promoter. She finds the number of people trading cryptos without reading and understanding the entire process to be astonishing.
Sejas added that people entered to buy cryptos until at least 6 months ago. They now enter to rule or arbitrate without understanding basic issues such as Gas/fees. This leads to unexpected claims and problems for those who do not make a responsible income.
Why So Much ETH Is Needed to Send DAI
Ethereum is a network with its accounting on its blockchain. In that accounting, the native currency or unit of account is Ether. When users move money from one Ethereum address to another, what they transfer is Ether.
Ethereum allows “writing” on top of that currency and DAI is precisely a currency written on Ether. Therefore, moving DAI from one address to another means moving Ether.
The difference between DAI and Ether is that the latter is not a stable currency, but its value fluctuates in the market based on supply and demand.
On Ethereum, it is necessary to pay a mining fee to be able to include each transaction made in a block. The miner receives the fees that the transactions that are part of a block generated when adding them to the chain.
Fees have been increasing as the number of daily transactions approach levels not seen since the beginning of 2018. If proposals to lower fees, such as Escalator or EIP-1559, are not implemented, nothing seems to indicate that they will be reduced in a significant and lasting way.
By Willmen Blanco
