Dai
DAI
Past performance is not a reliable indicator of future results. Learn more about asset risks.
Investment Risk
Baseline risk
All crypto-assets are risky, regardless of the type of token you hold. Here are some ‘baseline’ risks to be aware of before deciding to invest.
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Investment risk: The performance of most crypto-assets can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in crypto-assets.
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Lack of protections: Crypto-assets are largely unregulated and neither the Financial Services Compensation Scheme (FSCS) nor the Financial Ombudsman Service (FOS) will protect you in the event something goes wrong with your crypto-asset investments.
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Crypto-assets are complex: It may be difficult to understand the risks associated with a crypto-asset investment. Do your own research and if something sounds too good to be true, it probably is.
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Don’t put all your eggs in one basket: Putting all your money into a single type of investment is risky. Spreading your money across different investments makes you less dependent on any one to do well. A good rule of thumb is not to invest more than 10% of your money in high-risk investments such as crypto-assets.
Stablecoins
‘Stablecoin‘ (e.g. , ) is the term often used for crypto-assets that claim their value is linked to certain reserve assets such as a fiat currency (e.g. US Dollars). Stablecoins may use a range of different ways to maintain stability, each with their own risks
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Counterparty risk: Where the asset is backed by collateral (e.g. fiat currency) you are relying on a third party to maintain that collateral which introduces risk if the party becomes insolvent or fails to maintain the necessary collateral.
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Redemption risk: If the asset claims to be redeemable for underlying collateral, there is risk that the redemption process will not work as expected e.g. in times of market volatility or due to operational issues.
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Collateral risk: There’s a risk that the value of the collateral could decline or become volatile, affecting the stability of the asset (e.g. where the collateral is another type(s) of crypto-asset(s)).