MKR (Maker) – A Token for Economic Empowerment
The Governance Token of MakerDAO Trading on Coinmetro
Some weeks ago, our 15 Weeks of Summer campaign listed DAI token on the Coinmetro exchange. Fast forward to today and another busy week brings us to Maker. The Maker Protocol is one of the largest dApps on the Ethereum blockchain and one of the first decentralized finance (DeFi) applications with large-scale adoption and features the DAI stablecoin. The whole network is governed by the holders of their native token – MKR. Let’s find out more about the native asset of a pioneering DeFi network!
The Maker System – A Complex Crypto Environment
Behind the MKR token lies The Maker system – a crypto environment with two layers:
- MakerDAO – An Ethereum-based decentralized autonomous organization founded in 2015 managed by the holders of the MKR token. The peer-to-peer organization allows people to lend and borrow cryptocurrencies.
- Maker Protocol – A network hosted on the Ethereum blockchain allowing users to earn the DAI stablecoin. The Maker Protocol’s stability fees and collateral rates are regulated by MakerDAO, through the use of the MKR governance token.
The network was founded by a developer team led by Rune Christensen and received early funding from Andreessen Horowitz (a16z) and Paradigm Capital among others.
Essentially, the Maker Protocol allows users to generate the DAI stablecoin by leveraging collateral assets approved by the MKR holders. Like we discussed in a previous BLOG, DAI is a stablecoin that is resistant to hyperinflation due to its low volatility and is kept in check by the MKR holders:
- If the market price of DAI is above 1 USD, MKR holders can choose to gradually decrease the DSR (DAI Savings Rate), which will reduce demand and should reduce the market price of DAI toward the 1 USD Target Price.
- If the market price of DAI is below 1 USD, MKR holders can choose to gradually increase the DSR, which will stimulate demand and should increase the market price of DAI toward the 1 USD Target Price.
The MKR Token
The MKR token is an instrumental asset across several levels in the Maker Protocol’s architecture:
- Governance – Allows holders to vote on changes to the Maker Protocol. Proposal polling is conducted to establish a rough consensus of community sentiment before any Executive Votes are cast. This helps to ensure that governance decisions are considered thoughtfully and reached by consensus prior to the voting process itself.
- Recapitalization – If the system debt exceeds the surplus, the MKR token supply may increase through a Debt Auction to recapitalize the system.
- Maker Vaults – Smart contracts for leveraging collateral assets that generate DAI tokens. These contracts run in the form of on-chain encrypted protocols.
MKR holders can also allocate funds from the Maker Buffer to pay for various infrastructure needs and services, including Oracle infrastructure and collateral risk management research.
The governance mechanism of the Maker Protocol is designed to be upgradeable and as flexible as possible. As far as the supply of MKR tokens – it is not fixed and it keeps changing based on the market condition of its sibling DAI token. The efficient dual-asset leveraging has worked up the numbers for the entire community so far.
A Holistic DeFi Approach
Which of the two assets of the Maker Protocol – its stablecoin DAI, or its governance token MKR – has more potential is hard to say. But they are essentially intertwined, building up to what can today be regarded as a ground-breaking DeFi project.
Of course – the price stability of DAI is what makes it a good candidate for an exchange medium for many dApps. But in order to generate DAI, the Maker Protocol accepts as collateral any Ethereum-based asset that has been approved by MKR holders. MKR holders must also approve specific, corresponding Risk Parameters for each accepted collateral. Therefore, the system builds up to an omnidirectional financial climate, transparently governed and administered by its owners, where the MKR token is the changemaker token of the whole platform.
MKR – Increased Adoption and Full Decentralization
The potential of the project is building up and its adoption promises to cross into other industries as well. MakerDAO was one of the first projects to run reliable Oracles on the Ethereum blockchain. This has motivated many decentralized applications to jump on board the MakerDAO Oracles for ensuring the security of their systems and for up-to-date price data in a robust manner.
As a probable outcome of the project, successful management of the system should result in sufficient funds for governance to allocate to the continued maintenance and improvement of the Maker Protocol. Who knows what the community will develop in the coming years? The MKR holders will not only know first-hand, but will also have a word in how the future of this successful DeFi project will evolve.
Better Your Portfolio with Coinmetro!
MKR, the native token of one of blockchain’s better projects gets listed on Coinmetro exchange today. The stablecoin that is leveraged by the MKR holders was listed weeks ago on our exchange and you should also have a look at the DAI BLOG.
So how will you be bettering your investment throughout this period? Will you be waiting for the bull market to jump on the rising prices? Or maybe you will be consolidating your investment with the same assets at a fraction of the cost as we are experiencing now?
MKR and DAI form a great pair of assets that cannot go one without the other. Can you go without them?
- XCM Multi-Asset Rewards (MARs) on Coinmetro Exchange
As our own XCM Multi-Asset Rewards (MARs) program has evolved throughout this year, we are taking the opportunity to let you know of a lucrative passive income plan of which you can take advantage by staking Coinmetro’s own XCM token. The Multi-Asset Rewards system will pay out additional incremental rewards in several other tokens like VSP (Vesper), FLUX (Flux) and THT (Thought). Your portfolio expands and diversifies at the same time, adding weight with a solid palette of crypto assets, alongside the XCM token rewards.
Truth being said, here at Coinmetro, we are spending the bear market bettering ourselves, so we can help everybody else down the road. Throughout this summer, we’ve built several tokenomics and utility projects around the XCM token, paving the XCM Roadmap with even more updates in Q3, Q4 and beyond. Also – our asset has a new home – on its own XCM Token Page – and in many holders’ portfolio.
How will your portfolio grow in the near future, while the prices favor acquisition?
We want to hear all about it on Coinmetro’s Discord and Telegram channels! What will we be learning from you? What will you discover through the fruitful conversations our community ever engages in? Chat, learn and get better… and when you feel confident, start your investment journey by signing-up with Coinmetro!