The decentralized stablecoin on Ethereum backed by overcollateralized crypto assets is DAI.
DAI is created through MakerDAO smart contracts. Users deposit approved collateral—historically most commonly Ether—and borrow DAI against it. The collateral must be worth more than the DAI issued, helping protect the system if crypto prices fall.
DAI aims to trade near one U.S. dollar, but it is not the same as a dollar-backed stablecoin such as USDC or USDT. Its backing is primarily managed through crypto collateral, liquidation rules, stability mechanisms and decentralized governance. MakerDAO governance-token holders vote on important system parameters.
DAI launched on Ethereum in December 2017. A common mix-up is treating DAI as the name of the organization: MakerDAO is the decentralized organization and protocol historically associated with issuing and governing DAI.