Maker

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Discover Maker's fundamentals and latest news.

This content was generated by Whalee (BETA), an AI crypto assitant that analyses cryptocurrencies. Informations can be incomplete and/or erroneous. Please always double check and DYOR.

What is Maker?

Maker (MKR) is a decentralized ERC-20 token native to the Maker Protocol, a decentralized finance (DeFi) project. It is used for governance and utility within the MakerDAO ecosystem, where MKR holders vote on proposals to maintain the stability of the DAI stablecoin, which is soft-pegged to the US dollar.

How is Maker used?

Maker (MKR) is a cryptocurrency that plays a crucial role in the MakerDAO ecosystem. It has several key uses:

  1. Governance Token: MKR holders have the right to vote on risk management and business logic decisions within the Maker system, ensuring that the platform is governed responsibly.

  2. Transaction Fees: MKR is used to pay various fees associated with generating DAI, the stablecoin issued by MakerDAO. When fees are paid, MKR is burned, reducing the supply and maintaining the balance of the system.

  3. Recapitalization Resource: MKR can be used to recapitalize the system if debt exceeds the available collateral. This incentivizes MKR holders to manage risk responsibly and maintain the stability of the platform.

  1. Collateral: MKR can be used as collateral to generate and borrow DAI, ensuring that the borrowed amount is repaid.

  2. Risk Management: MKR is sold to offset losses if the value of DAI collateral drops, helping to maintain the stability of the system.

These uses highlight the importance of MKR in maintaining the stability and decentralization of the Maker ecosystem.

How do I store Maker?

To store Maker (MKR) tokens, you need a crypto wallet that supports ERC-20 tokens. Here are some options:

  1. Zengo Wallet: Zengo offers a secure and user-friendly wallet that supports MKR tokens. It features advanced security measures, including biometrics and recovery methods, ensuring your assets are safe even if your device is lost or compromised.

  2. Tap Wallet: Tap Global provides a secure and accessible wallet for storing MKR tokens. The wallet is compatible with any Ethereum wallet that supports ERC-20 tokens, and it offers features like 2FA authentication and bank-level encryption.

  3. Sapien Wallet: Sapien Wallet is a highly recommended multi-currency wallet for storing MKR coins. It offers advanced security features like fingerprint authentication, two-factor authentication, and PIN code, making it a secure option for long-term storage.

  1. Hardware Wallets: Cold hardware wallets like Trezor Wallet are also a safe option for storing MKR and DAI coins, providing an offline storage solution.

Before choosing a wallet, ensure it supports ERC-20 tokens and has robust security features to protect your MKR tokens.

How to buy Maker?

To buy Maker (MKR) tokens, you can follow these steps on various cryptocurrency exchanges:

Coinbase
  1. Create an Account: Download the Coinbase app and sign up with a valid ID and proof of address.
  2. Add a Payment Method: Connect a bank account, debit card, or initiate a wire transfer.
  3. Start a Trade: Select "Buy & Sell" on the website or tap the "+" button on the mobile app.
  4. Select Maker: Search for Maker and select it from the list of assets.
  5. Enter the Amount: Input the amount you want to spend in your local currency.
  6. Finalize the Purchase: Preview the purchase details and confirm the buy order.
Kraken
  1. Create an Account: Sign up for a free account on Kraken's crypto exchange.
  2. Connect a Funding Method: Add a payment method to buy over 200 cryptocurrencies, including MKR.
KuCoin
  1. Create an Account: Sign up with your email address, mobile phone number, and country of residence.
  2. Secure Your Account: Set up Google 2FA, anti-phishing code, and trading password.
  3. Verify Your Account: Upload a valid Photo ID.
  4. Add a Payment Method: Link a credit/debit card or bank account.
  5. Buy Maker: Use a variety of payment options to purchase MKR.
Binance
  1. Create an Account: Register on the Binance website or app.
  2. Choose a Payment Method: Select "Card" as the payment method and confirm.
  3. Check Payment Details: Review fees and confirm your order within 1 minute.
CoinList

CoinList provides a platform for token sales and incentivized testnets but does not directly facilitate buying Maker tokens.

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History of Maker

The history of Maker (MKR) began in 2014 when Rune Christensen, a Danish developer, created the MakerDAO, a decentralized autonomous organization (DAO) on the Ethereum blockchain. The Maker Protocol was designed by a group of developers and is governed by the MakerDAO, which is composed of MKR holders from around the world. These holders can stake their MKR tokens to vote on proposed changes to the Maker Protocol, ensuring transparency and stability in the ecosystem.

MakerDAO was established to enhance the stability and decentralization of the cryptocurrency market. The Maker token plays a significant role in achieving this goal, serving as a governance token and supporting the Dai stablecoin. Dai, launched in 2017, is a decentralized, unbiased, collateralized stablecoin soft-pegged to the US dollar, providing a more stable digital currency for users.

The Maker ecosystem has evolved over time, with the Maker Protocol generating new Dai through smart contracts known as Maker Vaults. Users can create these contracts through various web interfaces and apps, which act as portals to access the network. When a user wants to retrieve their collateralized crypto from the smart contract, they must first pay back the Dai they generated along with a stability fee.

The MKR token is used for governance, allowing holders to vote on proposals to manage the Maker Protocol. Proposals are deployed as smart contracts, and the Ethereum address receiving the most approval votes is granted administrative access to make the changes.

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How Maker works

Maker (MKR) is a decentralized governance and utility token within the MakerDAO ecosystem. It plays a crucial role in maintaining the stability of DAI, a stablecoin pegged to the US dollar. Here's how it works:

Stability Through Collateralization and Recapitalization

MakerDAO's stability is ensured through smart contracts called collateralized debt positions (CDPs). Users can lock up Ethereum-based collateral assets (ERC-20 tokens) to generate DAI. MKR is designed to support DAI and comes into play when the system needs to stabilize DAI's value.

Decentralized Governance

MKR holders have the power to influence MakerDAO's decision-making processes. They participate in voting on proposals that affect the platform, such as changes in stability fees, collateral types, and other critical parameters. This democratic governance model ensures that the MakerDAO community collectively determines the platform's direction.

Emergency Shutdown and Liquidation

In extreme scenarios, like severe market volatility or a significant system breach, MKR holders can trigger an emergency shutdown. During this process, all outstanding DAI debts are settled, and the system's collateral is auctioned off to cover DAI issuance, protecting the stability of the MakerDAO ecosystem.

Payment Utility Token

MKR serves as a utility token, used to pay for fees accrued on CDPs. Additionally, MKR is minted and burned based on the performance of the MakerDAO ecosystem. When the system needs to recapitalize, new MKR tokens are minted and sold to cover outstanding debts. Conversely, when excess DAI is generated, it is used to buy back and burn MKR tokens, reducing the supply and increasing the value of existing tokens.

Key Benefits
  • Decentralized Governance: MKR holders have a say in the platform's decisions, fostering community-driven development and adaptability.
  • Stability Mechanism: MKR plays a pivotal role in maintaining the stability of DAI, ensuring it remains as close to its US$1 peg as possible.
  • Collateralization: MKR collateralizes the entire MakerDAO system, providing security and stability for users interacting with DAI.
  • Emergency Shutdown: MKR holders can trigger an emergency shutdown, settling DAI debts and liquidating collateral to safeguard the MakerDAO ecosystem.
History and Impact

MakerDAO was established in 2014 and represents a paradigm shift in the traditional financial system. It was one of the pioneering DAOs on the Ethereum blockchain, providing a unique DeFi service: issuing and governing the DAI stablecoin. The Maker Protocol began in 2015 to develop a permissionless credit system, aiming to enable users to borrow money using cryptocurrency as collateral. Today, Maker is one of the most popular ETH-based platforms available, with over 2.1 million ETH locked in Maker CDP contracts.

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Maker's strengths

Maker (MKR) has several strengths that contribute to its popularity and effectiveness in the decentralized finance (DeFi) sector. Some of the key strengths include:

  • Governance and Community Control: MKR holders have the right to vote on risk management and business logic of the Maker system, ensuring that the community has a significant say in the platform's direction and decision-making processes.
  • Deflationary Mechanism: The MKR token employs a deflationary protocol, where a portion of the interest fees collected is burned, helping to maintain a healthy balance between supply and demand and preventing inflation.
  • Dual Coin System: The Maker platform's dual coin system, comprising MKR and DAI, allows for a stable and collateral-backed cryptocurrency (DAI) while MKR serves as a governance and utility token, providing a unique and effective solution to volatility issues.
  • High Total Value Locked (TVL): Maker has one of the highest total value locked (TVL) of any crypto, indicating a significant amount of assets deposited in the network, which adds to its stability and credibility.
  • Decentralized Governance: The Maker ecosystem relies on decentralized governance mechanisms, ensuring transparency and user control over the system.
  • Multi-Purpose Token: MKR serves multiple purposes within the Maker ecosystem, including governance, utility, and recapitalization, making it a versatile and valuable token.

These strengths collectively contribute to Maker's popularity and its ability to provide a stable and decentralized financial system.

Maker's risks

Maker (MKR) is a cryptocurrency token native to MakerDAO and Maker Protocol, which are decentralized systems built on Ethereum. MKR is primarily used for governance, utility, and recapitalization within the Maker ecosystem. Here are some key risks associated with MKR:

Governance Risks
  • Voting Power Concentration: The governance mechanism relies on MKR token holders, which can lead to concentration of voting power among a few large holders, potentially affecting the overall decision-making process.
Market Risks
  • Volatility: MKR is highly speculative and subject to significant market price swings, which can result in substantial losses for investors.
  • Market Manipulation: The token is susceptible to market manipulation due to its relatively low market capitalization and trading volume.
Regulatory Risks
  • Regulatory Uncertainty: There is a lack of regulatory clarity around MKR, and it may be deemed a security under the US Howey Test, which could impact its legal status and trading.
Technical Risks
  • Smart Contract Risks: As a decentralized system, MKR relies heavily on smart contracts, which can be vulnerable to technical issues, bugs, or hacks, potentially leading to losses or disruptions.
Liquidity Risks
  • Liquidity Issues: MKR's liquidity can be affected by various market conditions, such as low trading volume or large sell orders, which can impact its price and availability.
Other Risks
  • Recapitalization Risks: In the event of under-collateralization, MKR tokens may be created to raise capital, which can dilute the value of existing tokens.
  • Cybersecurity Risks: Like other cryptocurrencies, MKR is exposed to cybersecurity risks, including flash crashes and hacking attempts, which can result in significant losses.

Overall, investing in MKR carries significant risks, and investors should be prepared to potentially lose their entire investment.

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Did Maker raise funds?

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Maker’s team

  • Rune Christensen: The founder and CEO of MakerDAO, a Danish entrepreneur and graduate of the University of Copenhagen, who studied international business and biochemistry.

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