"The mechanics of the Dai Alpha are similar to NuBits, the second oldest stablecoin. "
The DA is the name we give the Dai economy when it is first launched a couple of weeks from now. As the name suggests, it’s an early and less secure version of the full system, that goes live with the goal of allowing public testing and integration by the community, as well as being useful for some economic activity (such as decentralized ETH daytrading).
The mechanics of the Dai Alpha are similar to NuBits, the second oldest stablecoin. The most important part of the system are the custodians, similar to NuBits these are centralized, trusted entities that are entrusted by the community to receive newly printed (“fresh”) Dai to sell off for cryptocurrency such as ether or bitcoin, which is then converted to fiat reserves and held to allow the custodians to maintain the 1 SDR peg in the future. Functionally, the peg will be maintained using a single “pegger contract” on Ethereum that buys and sells Dai in large volumes, at a high spread. The high spread is necessary for guaranteeing the economic viability of maintaining the Dai Alpha peg, which is important to ensure its stability.