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Chai token – principal and interest in one

CHAI is an ERC20 token that represents your Dai locked in a DSR (Dai Savings Rate) protocol where it earns interest continuously.

The Chai smart contract was developed in 2019 by Martin Lundfall, Lucas Vogelsang and Lev Livni. Chai is token on the Ethereum blockchain based on a smart contract that allows you to earn interest on your Dai.

The smart contract allows you to swap your Dai tokens into Chai tokens. Your Dai is then stored in the DSR – Dai Savings Rate and tokens issued back to you represent your Dai plus interest.
You can use the protocol trough official Chai website available here or by swapping tokens on other decentralised platforms like Uniswap or 1inch.


Interest on Chai Tokens

The DSR smart contract accrues interest through Maker Protocol. Interest rate variates and reflects changes in market conditions and regulatory mechanisms within the MakerDao platform.
At the time of writing, interest rate is 8% yearly. The interest on your tokens is the same as if you locked them in a DSR contract.

Maker Dao

The advantage of Chai tokens is that they are not locked for a certain period of time. They are always available in your wallet and you can transfer them just like any other token. You can send, receive and use tokens for purchases where they are supported. The tokens at the same time provide interest and their value goes up.
The Chai token lets you earn passive income in a truly elegant way and with just a few mouse clicks.

The advantage of Chai token is that they are always available in your wallet and you can transfer them as any other token.

Before Chai, after you submitted your Dai tokens to a DSR contract, you could’t simultaneously see them in your wallet or transfer them.

Chai Metamasku
The tokens are visible in the Metamask

Smart contract can also be accessed directly through the Etherscan platform at

Token Swap

The process of replacing Dai for Chai tokens is extremely simple. Once you have Dai tokens in your Metamask wallet, you need to allow the wallet to connect to the platform and choose the exchange of Dai to Chai, or vice versa, enter the amount and confirm the transaction.
After confirming the transaction, the corresponding amount of Chai tokens will be available in your wallet.

When you use Metamask for the first time, the Chai token will not be automatically visible and you’ll have to manually add it to the list of tracked tokens. Adding a token to Metamask is done by clicking on the function ad token and by selecting the desired token from the menu.

Chai u metamasku

The exchange rate

You will notice that the Chai token rate does not match the 1: 1 Dai token rate, but the Dai value is slightly lower.
Unlike Dai which is stablecoin and whose value is pegged to the US dollar, Chai token value grows over time and reflects the growth of accrued interest. When you convert your token back to Dai after a while, you will receive Dai tokens in principal value along with the accumulated interest up to that point.
Just like holding Dai in DSR.

A smart contract gives you complete control over your tokens while they earn interest.


In February 2020, Trail of Bits carried out a two-day smart contract check.
No security gaps have been found. You can read the full report on their findings  here.

At the recent ETH Denver conference, Vitalik Buterin, the creator of Ethereum, publicly urged users to use Chai instead of Dai tokens.
See the full video here. Mentioned part of the video starts at 11:11:16.


Future development

The development team recently announced that they are actively working on a protocol version that will support transactions free of charge, the so-called gasless transfers.

Read more on their GitHub profile.

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