Maker (MKR) serves as the governance token for both MakerDAO and the Maker Protocol. These are, respectively, a decentralized organization and a software platform built on the Ethereum blockchain, enabling users to create and manage the DAI stablecoin.
The Maker project was initially conceptualized in 2015 and launched in its entirety by December 2017. Its main goal is to manage DAI, a decentralized cryptocurrency maintained by the community with a stable value that is softly pegged to the US dollar.
MKR tokens work as voting shares in the organization overseeing DAI. While MKR holders don't receive dividends, they do have voting rights on the development of the Maker Protocol. The value of these tokens is expected to rise in line with the success of DAI.
The Maker ecosystem is among the pioneers in the decentralized finance (DeFi) sector, which aims to build decentralized financial tools leveraging smart-contract-enabled blockchains like Ethereum.
Who Are the Minds Behind Maker?
MakerDAO, the initial entity within the Maker ecosystem, was founded in 2015 by Rune Christensen, an entrepreneur from Sealand, Denmark.
Christensen holds a degree in biochemistry from Copenhagen University and has also studied international business at Copenhagen Business School. Before establishing MakerDAO, he co-founded and led an international recruiting company called Try China.
What Sets Maker Apart From Others?
As of October 2020, DAI stands out as one of the foremost stablecoins, which are digital currencies pegged to the USD or another standard currency. It ranks as the 25th largest cryptocurrency with a market capitalization exceeding $800 million and boasts more active addresses than USDT, the leading stablecoin.
MKR's distinctive feature is that it empowers its holders to engage directly in DAI's governance. Each MKR token owner can vote on various adjustments to the Maker Protocol, with their influence determined by the size of their MKR holdings. Holders can vote on:
* Introducing new types of collateral assets to the protocol, allowing additional cryptocurrencies for minting more DAI;
* Modifying the risk parameters of current collateral types;
* Adjusting the DAI Savings Rate, which affects the earnings of those who lock DAI in a specific contract;
* Selecting oracles, the entities responsible for providing reliable off-chain data to the Maker ecosystem;
* Platform upgrades.
This governance capability over one of the market's largest stablecoins fuels demand for MKR tokens and influences their market value.
How Many Maker [MKR] Coins Are Circulating?
The issuance and removal of MKR tokens are managed through a complex system of interconnected mechanisms designed to ensure DAI remains fully backed by other cryptocurrency assets and retains its soft peg to the USD. There is no predefined cap on the total supply of MKR.
DAI's value is backed by collateral—other cryptocurrencies deposited by users during the minting of new DAI tokens, stored in "vaults," which are essentially smart contracts on the Ethereum blockchain.
During market downturns, the value of the collateral in these vaults might not suffice to completely back the corresponding DAI. In such scenarios, the Maker Protocol automatically triggers the liquidation of the vault's assets, using the proceeds to settle the vault's debts. If the liquidation does not generate enough DAI, the Maker Protocol creates new MKR tokens to sell and cover the shortfall, thus increasing the total supply.
Conversely, if the auction proceeds exceed the necessary amounts for full collateralization, the excess is used by the Maker Protocol to repurchase and burn MKR tokens, reducing the overall supply.
Consequently, the supply of MKR is dynamic, fluctuating based on market conditions and the health of the overall DAI ecosystem. As of October 2020, around 1 million Maker tokens were in circulation, valued at over $500 million.
How Is Maker's Network Kept Secure?
MKR is an ERC-20 token, meaning it operates on and benefits from the security of the Ethereum blockchain. Ethereum itself is safeguarded by its Ethash proof-of-work consensus mechanism.
Where Can You Purchase Maker (MKR)?
Maker tokens can be traded on various exchanges, including:
