Maker coin is the utility token which provides functionality to the Maker platform and works alongside its Dai stablecoin. Its main tasks include providing voting rights and enabling the payment of fees and interest on the platform.
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What Is Maker Coin
The Maker coin (MKR) is the cryptocurrency unit native to the Maker platform. It operates alongside another coin which exists on the same platform - Dai, which is a decentralized stablecoin based on the Ethereum blockchain. The Dai coin went live in December 2017 as the result of a collective effort of a group of 35 persons working under the guidance of Rune Christensen. Dai aims to correct the issues relating to the volatility of regular cryptocurrencies which prevents them from becoming mainstream means of payment. Instead of unpredictable value fluctuations which can change on daily basis, Dai coin offers stability relative to the US dollar (1 USD for 1 Dai) and is backed by collaterals.
At the same time, Dai coin serves to bring broader access to financial services to its users across the globe. This includes access to a credit system built around the principle of easy and fair access, stable loans and the lack of local restrictions. To make all of this possible, Maker coin works in the background as a utility token that ensures the proper operation of both the platform itself and the Dai stablecoin.
Maker Coin Price
The price of the Maker coin is changeable, unlike that of its Dai “brother,” whose price does not fluctuate and is independent of backing by any asset-holding institutions such as banks. While its immediate competitors such as Tether are backed by the fiat currency held in bank reserves, Dai is backed by the system running based on smart contracts. This means leaving full control in the hands of users who can easily transfer their Dai coins across the globe and send it to their wallets. The Maker platform also aims to establish itself as a stable platform for dapps (decentralized apps) with higher resistance to price fluctuations.
Maker Coin Use Case
Maker coins serve as governance tokens which guarantee their owners the right to vote on any important decision related to the platform. These include risk management, payment of Dai loans or setting the debt ratio. If one wants to take the loan in Dai, the Maker coin is used for the payment of related 1% interest rate.
The MKR coins also operate as the utility tokens used for the payment of the fees relating to the collateralized debt position (CDP) mechanism which allows for the generation of Dai. With the payment of fees, the MKR coins are removed from the supply, with the demand for them rising together with the demand for the Dai coin. New MKR coins are generated automatically by the Maker platform in case any portfolio is identified as undercollateralized. In this manner, the coin is used to improve the solvency of the entire Maker ecosystem.
As of November 2018, the market cap value of the Maker coin stood at USD 482 million, down from its all-time high from early 2018 when it went over USD 1 billion.