xDai is a cryptocurrency created from the MakerDAO DAI token. Dai is a stable token on the Ethereum mainnet pegged to the US dollar. xDai can be acquired by users in a number of ways (for example with a credit card) but behind the scenes, it is always created from Dai, and the value of xDai corresponds 1:1 with Dai. Here's how xDai is created:

• Dai is locked into a smart contract on Ethereum. This means it must remain in that contract and cannot be moved until the contract receives a verified signal to unlock it.
• Using a bridge mechanism called the TokenBridge, data about the locked Dai is transmitted to a smart contract on the xDai chain.
• The contract on the xDai chain creates (mints) the exact same amount of xDai.
• This xDai is then usable on the xDai chain. Users only need to switch the network in their wallet, and xDai is available using the same Ethereum address.

When users want to exchange xDai for Dai, the process is executed in reverse. xDai is burned (destroyed) in the xDai chain smart contract, and a verified signal is sent to unlock the exact same amount of Dai on the Ethereum mainnet. The unlocked Dai is then returned to the user’s address on the Ethereum mainnet.