The Maker Protocol allows users to borrow using crypto assets and also stabilize DAI using its native token, MKR. MKR holders benefit from several use cases and rewards.
BTSE has listed Maker token (MKR), the governance token of the Maker Protocol and its governance community, MakerDAO, adding to the growing list of cryptocurrencies available to users on the platform.
What Is the Maker Protocol?
Maker is an Ethereum-based decentralized lending platform that allows users to borrow and lend using their assets. Compared to traditional finance where loans are taken using fiat as collateral, users can borrow from Maker using ETH, BTC, LINK, and other crypto assets as collateral. Users receive the loans in the form of DAI, a stablecoin pegged to the US dollar. Maker is the largest decentralized lending platform with around $10 billion in assets staked (TVL) in the Maker Protocol.
How Does the Maker Protocol Operate?
The Maker Protocol allows users to generate loans in the form of DAI using multiple crypto assets as collateral. New Dai tokens are created using smart contracts referred to as Maker Vaults.
To borrow Dai from the Maker Protocol, users need to deposit any specified crypto assets in a Maker Vault after which they are credited with Dai. If the value of the crypto asset used as collateral drops significantly, the Maker Vault can liquidate the collateral to secure the loan. Dai loans can be paid back anytime, in return for the collateral deposited by the user.
MKR Use Cases and MakerDAO
The Maker token (MKR) helps govern the Maker Protocol and MakerDAO, so its holders have the authority to implement changes through on-chain voting. The quantity of MKR in circulation depends on how the stablecoin DAI may fluctuate from the pegged standard of the US dollar.
If the value of DAI is close to $1.00, MKR tokens are burned, thereby decreasing the amount of MKR tokens in circulation. If the value of DAI is far off from $1.00, more MKR tokens are created, increasing the amount of MKR in circulation.
MKR was priced at $2,299 on September 30, 2021, giving it a market cap of nearly $2.10 billion and 0.10% market cap dominance, according to CoinGecko. Its circulating supply is around 901,000 MKR tokens out of just over one million in max supply.
MakerDAO is the protocol’s governance community, whose key participants include leading crypto investment firms such as Andreessen Horowitz, Polychain Capital, and others. Voting on key decisions in the Maker ecosystem is through Proposal Polling followed by Executive Voting.
Proposal Polling enables MKR holders to vote on a proposal before it’s implemented while Executive Voting allows the winning proposal to be reflected in the smart contract of the protocol. Ultimately, users with large token holdings determine the proposals that are implemented.
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