Ethereum Foundation Sells ETH for DAI: A Smart Hedge?

The Ethereum Foundation regularly sells its ETH holdings. According to Binance News, 100 ETH was sold yesterday.

Vitalik Buterin has previously explained the purpose behind these sales, stating that the funds from these sales go towards compensating researchers and developers.

There’s something to consider here:

• In Bitcoin, developer compensation is paid directly in BTC without needing to sell it first.
• Ethereum developers, on the other hand, don’t seem to view ETH itself as the ideal means of payment.
• Even more interesting is the choice of asset: the Foundation sold ETH for DAI tokens, not for Dollars, not for other stablecoins.

Why DAI? It’s accepted far less frequently than fiat currencies, and even less than other stablecoins like USDC or USDT. Yet, DAI was chosen.

What’s unique about DAI is that the redemption of DAI is guaranteed by a smart contract that provides collateral, often in ETH, used for minting. If ETH’s value drops, DAI holders might redeem their tokens for more ETH than the Foundation spent yesterday.

So, this might be more of a smart hedge against ETH’s price decline than just a payment strategy.

If you're also considering a hedge against ETH volatility, you can swap ETH for DAI at the best rates on rabbit.io.