As a rapidly developing concept, DeFi lending continues to open up opportunities and novel ideas for dapps. 

One new creation utilizing DeFi lending is Redeemable Dai (known as rDai for short). rDai operates in a similar fashion to the “get something for free” model, which allows users to “pay” for products and services using nothing but accrued interest from loaned cryptocurrency.

At the time this was written, Dai generates around 10.63% annually via DeFi lending protocols, which could be utilized in such systems.

Redeemable Dai

What does rDai do?

rDai is a Tokenized version of the Dai stablecoin. The difference between the two is that rDai enables you to automatically allocate your accrued interest to a recipient of your choice.

The concept was originally created for the purpose of charitable giving, but also opens the door for a range of use cases. This includes decentralized autonomous organizations (DAOs), layer 2 payment protocols, and other dApps.

How does rDai work?

rDai is 1:1 backed with Dai, and is based on Ethereum as an ERC20 token. The custody of collateral also remains decentralized – unlike many other stablecoins. Users’ Dai coins are both locked up and redeemed via a smart contract, which means another party is never in charge of your Dai.

How do I get rDai?

  1. To get rDai, you will first need to acquire some regular Dai tokens. This is most easily done via an exchange, or the Maker platform itself.
  2. Next, you’ll want to visit the rDai dapp,which you can find here.
  3. You’ll send your Dai tokens into the rDai contract, and it will automatically issue you some rDai tokens.
  4. The Dai which you have deposited into the contract will automatically be lent via the DeFi protocol providing the best rates. You can redeem your Dai at any moment in full; it is only ever the accrued interest that is donated.
  5. Once you’ve been issued your rDai, you can choose where to allocate your interest payments.

You may also transfer or sell your rDai to anyone at any time. These rDai will continue to pay interest to the recipient which you selected, unless they choose to change it.

If desired, they can easily redeem it for regular Dai tokens, or simply change the recipient of accrued interest to a new one.

Who can I donate to?

Since rDai is rather new, it currently only has a few formal partners for charitable giving. These include the Molochdao Community Fund, ETHBerlin, and the Giveth Community Fund.

Future possibilities, however, are endless. Not only charities, but all sorts of other dApps and services could very easily take donations or payments via rDai interest.

This is just the beginning for rDai

We can imagine a lot of use cases coming for rDai.

It presents an ultra-simple way to separate principal and interest on invested money, giving users a way to spend or donate interest while keeping their core investment untouched.