Maker

What is Maker Protocol (MKR)?

Maker (MKR) is a Maker protocol utility token based on ERC-20 token standard. The Maker Protocol is essentially multi-party Dai system operated by MakerDAO, which is a decentralized organization based on Ethereum. If you’re interested in current asset performance, check out the MKR price chart above.

The Maker Protocol allows users to issue Dai (DAI). stablecoins. All they have to do is take out a loan, locking in collateral in exchange for Dai. Dai is one of the largest stablecoins softly pegged to the US dollar. Essentially, any supported software such as ETH, can be locked in the Maker protocol and the same amount of Dai will be created as debt. The DAI value is not directly related to the Maker price.

Founder of MakerDAO

Rune Christensen developed MakerDAO in 2015. Rune Christensen is a Danish entrepreneur with a background in biochemistry and international business. In addition to being the founder of MakerDAO, he also co-founded Try China.

Rune Christensen is accompanied Stephen Becker who is the COO of the MakerDAO crypto project. Has experience in managing various financial projects, including Polus Capital, Cubit Capital and others.

Since launch, Maker’s price has shown a trend of mild to high volatility. It also tends to follow broader market trends and its value changes accordingly.

Purpose of MKR tokens

The main goal of MKR is to provide its holders with direct access to DAI management process. To vote on the various changes planned for the Maker protocol, users must have MKR tokens. Their influence depends on the number of Maker Coins they own.

The voting process occurs through two pools:

• Pool of proposals
• Executive pool

Community opinion on a proposed modification is assessed using a pool of suggestions. This process is carried out to ensure that proposals for amendments have been carefully considered. Once the proposal is approved, it’s time to go to the executive pool. In this pool, MKR token holders can officially vote for or against a particular proposal. The active supply is then selected based on the smart contract address that receives the most MKR tokens.

However, MKR tokens have another purpose – recapitalization. It means that MKR tokens can be used to protect the DAI stablecoin ecosystem from bankruptcy during periods of high volatility. on the crypto market. You will find a detailed explanation in the next chapter.

Supply of MKR tokens

MKR tokens have a dynamic supply that is affected by how changes in the cryptocurrency market affect DAI tokens. This is due to the second function of MKR tokens discussed above. The absence of a maximum supply limit means that MKR is an inflationary asset. Therefore, it may be more difficult to predict long-term trends in Maker prices.

So how does it work?

Like a stablecoin the value of DAI is secured by collateral. Other crypto assets that users deposit into Ethereum-based vaults when creating new DAI tokens serve as the collateral backing DAI.

During times of falling prices in the cryptocurrency market, the amount of cryptocurrency stored in these vaults may not be sufficient to fully back DAI. To solve this problem, the Maker Protocol takes insufficient storage and begins automatically liquidating its funds.

The Creator then uses the collected income to pay off the debts associated with that particular vault. Following this, new MKR tokens are created to compensate for any shortfall in DAI that occurred during the liquidation. Essentially, this increases the total supply and affects the price of MKR.

On the other hand, when the amount of DAI generated in auctions exceeds the required threshold, The Maker protocol uses a mechanism for redeeming and burning MKR tokens.. Essentially, Maker buys a portion of MKR tokens and immediately burns them. Thus, the number of tokens decreases.

However, additional MKR tokens are not mineable and can only be issued for recapitalization purposes. However, you can always buy MKR tokens on various exchanges. Just keep in mind that Maker’s price is subject to fluctuations.