The first sultan who is attestable is Sultan Mubarak, whose funerary stele states died in 1093. His dynasty apparently lasted until 1230/1249. It was during this period, the 11th–mid 13th century, that the Sultanate enjoyed its greatest prosperity. This prosperity was mostly based on the monopoly of the external trade of the Ethiopian interior, but also involvement in the transit trade between Egypt and India. It was also through Dahlak that Ethiopia maintained diplomatic relations with Yemen. In the mid 13th century, however, the Zagwe kings began to make use of a new trading route in the south, with the port town Zeila as its final destination. Thus Dahlak lost its trading monopoly. Around the same time, Ibn Sa'id al-Maghribi records that the Dahlak sultans struggled to stay independent from the Rasulids.
From the 12th century the sultans of Dahlak controlled the important trading town of Massawa on the African Red Sea coast, which was governed by a deputy titled the Nai'b. Other coastal settlements on the African continent might have been controlled by the Dahlak sultans as well, at least temporarily. To the Ethiopians, the sultan of Dahlak was known as Seyuma Bahr ("Prefect of the Sea"), in contrast to the Bahr Negash ("Lord of the Sea") of Medri Bahri.
It was shortly after the death of Sultan Mubarak that the Dahlak sultanate began to mint coins, which were used to pay for imported goods such as Egyptian textiles and storax balsam.
By the 15th century, the economy of the sultanate was not only in decline, but it was also forced to pay tribute to the emperors of Ethiopia. In 1464–1465, Massawa and the Dahlak archipelago were pillaged by emperor Zara Yaqob. By 1513 Dahlak had become a vassal of the Tahirids. In 1517 and 1520 it came into conflict with the Portuguese empire, resulting in much destruction. By 1526 the Dahalik sultan, Ahmad, had been degraded to a tributary. There was a short revival of the sultanate during the Ethiopian-Adal war, where the sultanate of Adal waged a temporarily successful jihad against the Ethiopian Empire. Sultan Ahmad joined Adal and was rewarded with the port town of Arkiko. However, in 1541, one year after the death of sultan Ahmad, the Portuguese returned and destroyed Dahlak yet again. Sixteen years later, the islands were occupied by the Ottoman Empire, who made them part of the Habesh Eyalet. Under the rule of the Ottomans, the Dahlak islands lost their significance.
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