If there’s one thing you can’t say about Bitcoin, it’s that it’s stable. In 2021, for example, the cryptocurrency started at $30,000, then peaked at $68,000, later returned to 50% less than its ATH, and is now worth around $30,455. The obvious disadvantage of cryptocurrencies is the volatility of their value— up and down price fluctuation—that discourages many people from adopting virtual currencies. Below we take a look at the Maker control token underlying MakerDAO.
What Is Maker?
MakerDAO is a decentralized funding platform (DeFi) based on Ethereum (ERC-20), which provides support for a stable DAI cryptocurrency. When a currency such as Ethereum is placed in MakerDAO, users generate their DAI assets. The basic idea is to create a decentralized economy where users can convert their fiat currency into cryptocurrency while borrowing and lending money. In addition to the stable DAI token, the platform also has an MKR management token, which is necessary to maintain the stability of DAI.
What Is MKR?
MKR is an ERC-20 token created and burned based on how close the DAI stablecoin is to the US dollar. New MKRs are generated according to the stability of the DAI. If the DAI fluctuates too far relative to the face value of the dollar, more MKRs are created, which increases the overall supply.
How to Use MKR
Coin holders benefit financially from MakerDAO’s stable system. Consequently, MKR holders can vote when the platform makes decisions, such as determining stakes and the types of collateral the protocol can accept. In addition, one MKR equals one vote, which means that holders of more MKRs can have more influence on the voting results.
MKR, How Does It Work?
Crypto Maker uses a peer-to-peer protocol to develop within the open and decentralized Ethereum blockchain code. It also allows the development of smart contracts (CDPs). Coins from this platform are based on ERC-20 Ethereum so that they can be exchanged for cryptocurrencies such as Augur, 0x, OmiseGO and others because of comparison standards or initial values.
Ultimately, this results in transactions being executed at a higher speed due to the efficiency of the verification processes. To conduct transactions with this cryptocurrency, the user sends a request to create a smart contract (CDP). Then, they must enter the number of Ethers that will serve as a fund or guarantee the appropriate amount of DAI. MKRs are also produced when this happens, and the system locks the Ethers that worked as collateral accordingly.
Who Created MakerDAO?
The author of MakerDAO technology was Rune Christensen, a Dane. Before co-founding the international recruitment company Try China, he researched biochemistry and international commerce. Beginning in 2014, Christensen founded and led the Maker Foundation, headquartered in Santa Cruz, California.
And in March 2015, Christensen, ex-Amazon software engineer Andy Milenius and several other developers began developing a decentralized platform allowing users to borrow the cryptocurrency Stablecoins.
As early as March 26, 2015, Christensen published an article on the website, the authors of which presented the concept of eDollar, a Stablecoin on the Ethereum blockchain. The creation of the eDollar was partly due to BitUSD’s inability to attract market makers, which led to a lack of liquidity.
As an incentive for market makers, later called holders, Christensen proposed rewarding them with Maker tokens (MKR) for providing liquidity.
Where Can MKR Be Stored?
It is important to understand that storing purchased Maker tokens in a safe and reliable wallet is necessary. There are several Maker wallets on the market and online, and when selecting a wallet for yourself, you must clearly understand your needs. The main focus should be on security and ease of use for your future MKR wallet.
You can use Guarda to store your MKR tokens. The platform also allows you to perform other transactions like exchanging, sending, and receiving MKR.
How Is MKR Purchased?
MKR is listed on various cryptocurrency exchanges such as Guarda. Guarda is a secure—non-custodial—wallet exchange platform that allows you to purchase, exchange and store MKR and other tokens. It is available on the web, desktop, and mobile wallets alike. To purchase the MKR tokens, first, you need to download the app (on any device) or use it via browser. Then create an account on the platform, save your password and add the wallet to your list. After doing those, you can start purchasing the token and other tokens.
The Future of Maker?
MakerDAO adheres to transparency by providing videos of its daily meetings online. MakerDAO and its MKR tokens are at the forefront of the decentralized finance (DeFi) sector, one of the major success stories of 2019. MakerDAO’s efforts to create a stable coin without redundancy issues are admirable. However, MakerDAO has developed a scheme to preserve the value of its stable DAI coin, which may promote its wider use because of MKR’s guarantee mechanisms and security flaws.
MakerDAO also has an emergency mechanism called “global settlement” as insurance. The user community holds settlement keys if something goes wrong in the MakerDAO schema. These can be used to initiate an agreement whereby DAI owners are issued a CDP guarantee for an amount equivalent to ether.