What is Maker (MakerDAO) and MKR tokens?

Maker (MKR) is a management token of MakerDAO and Maker Protocol - a decentralized organization and software platform based on Ethereum blockchain.

What is Maker (MakerDAO) and MKR tokens?

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Notice: This article is for informational and educational purposes only, and you should not take it as financial advice.

Maker (MKR) is a management token of MakerDAO and Maker Protocol - a decentralized organization and software platform based on Ethereum blockchain - that allows users to issue and manage DAI stablecoin.

Originally conceived in 2015, and fully launched in December 2017, Maker is a project tasked with managing DAI, a decentralized cryptocurrency run by a community with a stable value pegged to the US dollar.

MKR tokens act as a kind of voting share for the organization that manages DAI; although they do not pay dividends to owners, they give them voting rights over the development of the Maker Protocol and are expected to value in line with the success of the DAI itself.

The maker ecosystem is one of the earliest projects in the decentralized finance (DeFi) scene: an industry that wants to build decentralized financial products on top of smart-enabled blockchains, such as Ethereum.

Who are the founders of Maker?

MakerDAO, the first entity within the larger Maker ecosystem, was created in 2015 by Rune Christensen, an entrepreneur from Sealand, Denmark. Christensen graduated in biochemistry from the University of Copenhagen and studied international business at the Copenhagen Business School. Prior to MakerDAO, he was a co-founder and manager of the international recruitment company Tri China.

What makes Maker unique?

Since October 2020, DAI has been one of the most popular stabilizers (cryptocurrencies whose prices are pegged to the USD or another traditional currency). It is the 25th largest cryptocurrency with a market capitalization of over 800 million US dollars and has more active addresses than the USDT - the largest stabilcoin on the market.

The unique proposal of MKR lies in the fact that it allows its owners to directly participate in the process of managing DAI. Each Maker token holder has the right to vote on certain changes to the Maker Protocol, with their voting power depending on the size of the stakes in the MCR.

Some of the aspects of the protocol that the holders can vote on are:
  • Adding new types of collateral to the protocol, allowing users to submit new cryptocurrencies to mint more DAIs;
  • Modify the risk parameters of existing types of collateral;
  • Change the DAI savings rate: DAI token holders can earn by saving by concluding a special contract, and the savings rate affects the profitability of that contract;
  • Choose Prophecies - Entities that aim to provide reliable off-chain data to the Maker ecosystem;
  • Platform upgrades.

This ability to participate in the management of one of the largest stabilizers on the market is what drives the demand for MKR tokens and consequently affects their value.