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What Is the xDai Chain?

Last updated: October 26th, 2021

The xDai chain is an Ethereum-based sidechain that uses a Proof-of-Stake mechanism. It has been live since late 2018 and uses a stablecoin, xDai, as its native cryptocurrency.

As the project’s site puts it, transactions on the xDai chain are “very fast, very inexpensive, and require a single token (xDai).”

What Is the xDai Cryptocurrency?

This native cryptocurrency of the xDai chain has a price that’s pegged to the US Dollar, making it a stablecoin similar to USDC, Tether, and… the original Dai! Being pegged to the US Dollar is what makes the cryptocurrency “stable,” as it’s supposed to always be worth 1 US Dollar.

You don’t need to understand all the mechanics of a stablecoin to learn about xDai, but it’s never a bad idea to learn!

The difference between the previously-mentioned stablecoins and xDai is that the others are tokens that operate on Ethereum, while the xDai chain is its own separate network.

What Is xDai STAKE?

The xDai chain employs a Proof-of-Stake (‘PoS’) mechanism for confirming transactions, which is newer than the common Proof-of-Work (‘PoW’) mechanism. Ethereum, as an example, is currently transitioning from PoW to PoS.

A brief explanation of PoS is that users deposit their cryptocurrency into the blockchain in order to become validators. The more validators for a blockchain, the more reliable and secure that blockchain becomes. For this purpose on xDai, there’s a token aptly named xDai STAKE.

You do not need xDai STAKE if you want to use xDai — it’s optional, and only necessary if you desire to be a validator or delegator.

Why Would One Want to Use xDai?

The xDai chain is a good companion to Ethereum.

As we briefly mentioned earlier, transactions on the xDai chain are very fast and very cheap. A transaction on the xDai chain costs a few pennies and will confirm in a matter of seconds, compared to many dollars and likely many minutes on the Ethereum chain.

Simply put, if you’re being stonewalled by Ethereum’s gas fees or if you want to explore what else is out there, you can ⭐actually do things⭐ on xDai!

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