xDAI is a clever combination of MakerDAO's DAI stablecoin and POA's sidechain and tokenbridge technology. xDAI is marketed as the first ever stablechain. Utilizing the TokenBridge technology, every xDAI token is 1-1 pegged to DAI on Ethereum mainnet.
Now that Saturn Wallet added support for xDAI Chain, it is a good time to learn more about xDai Chain and xDAI.
If you have never heard of POA Network, what a sidechain is designed to do or how Proof of Authority consensus works, we have covered POA before in our EVM Blockchain series. Definitely recommend you give the below article a read before moving on!
What is xDai Chain?
- Ticker: xDAI
- Consensus: PoA (proof of authority)
- Block time: 5 seconds
Why use xDAI at all? Why not just use DAI? That is a great question! What it really comes down to is the extremely low cost to perform a transaction (the cost to send xDAI to someone). It is only about $0.000021 USD, which means you can send roughly 500 transactions for 1 penny. Compare that to what it can cost to send fiat money (3-5% merchant fees or up to 8% for international transfers), or even an Ethereum transaction during high network usage ($0.10 USD) and you can quickly see why xDAI could be interesting to use depending on the scenario.
Thus, if you fancy making an dApp on a sidechain that needs stablecoin functionality (e.g. a prediction market or sports betting) xDAI might be a good choice! Or you can use DAI on mainnet Ethereum, like Augur v2 plans to do for its decentralized prediction market platform.
Despite the skepticism about xDAI's utility it has so far successfully processed tens of thousands of dollars in payments, and has acted as an onboarding mechanism for mainnet Ethereum thanks to the Burner Wallet.
What is Burner Wallet?
First thing to remember is that xDai and Burner Wallet, are not the same thing, they are two separate projects - but they do add value to each other rather nicely. For example, during ETHDenver in February 2019 food trucks accepted payments in xDai via Burner Wallets and sold 4,405 meals. This amounted to a total of $38,432.56 and the total fees were only twenty cents. That alone is a pretty strong use case for xDai! Sure a crypto event will have been filled with savvy users but the low fees could definitely attract more vendors to take the dive and try it out at different events.
The idea behind Burner Wallet is to provide a way to quickly carry and exchange very small amounts of crypto with a mobile browser. Which is why you find it operating on xDai Chain, to take advantage of low fees and quick transaction times. You could think of it as a wallet to use for crypto you know you are going to spend, because, note the name of the product: burner.
The very name of the wallet is to always remind users it is not secure enough for long-term storage. Reason being that your private key simply lives in your web browser's cookies, so the wallet trades security for being convenient with no need to remember seed phrases or any long winded installation process to get started (just load the site and you will find a wallet is generated for you automatically). Once you are done exchanging your crypto, you should be sending any remaining xDai to a more secure wallet, and then using the Burn PK function to forget your private key completely.
You could use Saturn Wallet for this purpose, as we now support xDAI Chain.
Future is bright!
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