I think RAI is one of the coolest experiments in crypto right now. So I thought I’d write my version of an explainer for it, from the perspective that I have introduced in my previous article on Supply and demand for stablecoins. Back when I wrote it, my understanding of RAI was poor. The version of DAI it describes (single-collateral DAI, before the introduction of custodial stablecoins as collateral) is actually very close to RAI, however there is an interesting difference: Instead of applying an interest rate to balances, like DAI does, RAI directly manipulates the redemption price (which is always 1 USD for DAI). I think it’s nice to directly describe this mechanism. If you want to understand more on how Collateralized Debt Positions (CDPs) work to maintain stability, then I still recommend reading my previous article!