Reading time 7
What is Maker (MKR)
Maker (MKR) is a cryptocurrency and a governance token for the MakerDAO decentralized platform on the Ethereum blockchain. MakerDAO is a decentralized autonomous organization that issues a stablecoin called DAI, which is pegged to the value of the US dollar. MKR holders have the ability to vote on key decisions and upgrades to the MakerDAO protocol, making it a unique example of decentralized governance in the crypto space.
Maker (MKR) was created in 2015 by Rune Christensen as a decentralized platform for creating and managing stablecoins on the Ethereum blockchain. MakerDAO, the organization behind Maker, launched its first stablecoin, DAI, in December 2017. Since then, DAI has become one of the most widely used stablecoins in the decentralized finance (DeFi) space, thanks to its stability and decentralization.
MakerDAO’s governance model, in which MKR holders can vote on protocol upgrades and other key decisions, has been seen as a successful example of decentralized governance in the crypto space. The value of MKR has fluctuated over time, reflecting the success and growth of the MakerDAO platform, as well as broader trends in the cryptocurrency market.
In recent years, platform has expanded its offerings beyond DAI to include other stablecoins and financial products, further solidifying its position as a key player in the DeFi space.
How Maker (MKR) works
Here’s how the MakerDAO platform works:
- Collateral: To create DAI, users deposit collateral in the form of Ether (ETH) into a CDP. The collateral is held in the CDP as a guarantee to repay the DAI that is created.
- Debt creation: Once the collateral is deposited, the user can then create DAI by borrowing against the value of their collateral. The amount of DAI that can be created is determined by the collateralization ratio, which is the value of the collateral divided by the value of the debt.
- Stable value: The value of DAI is maintained through a system of incentivized market mechanisms and autonomous feedback loops. The Maker protocol adjusts the supply of DAI and the interest rates on CDPs to maintain the value of DAI close to $1.
- Governance: MKR holders have the ability to vote on key decisions and upgrades to the MakerDAO protocol. This allows the community to govern the platform and make decisions that impact its future direction and success.
- Repayment: To close a CDP and retrieve the collateral, the user must repay the debt in DAI and pay a stability fee. The stability fee is used to incentivize users to repay their debt and maintain the stability of the DAI.
Overall, MakerDAO’s platform combines elements of decentralized finance, such as smart contracts and token-based governance, with traditional financial tools, such as debt and stablecoins, to create a unique and innovative financial system.
Can Maker (MKR) be trusted
From a technical standpoint, MakerDAO is built on the Ethereum blockchain, which is a secure and decentralized platform. Additionally, the Maker protocol is open-source and has been audited by multiple security firms, which adds to its transparency and security.
However, as with any cryptocurrency or decentralized platform, there are potential risks involved, such as platform vulnerabilities, market volatility, and liquidity issues. It’s important for individuals to carefully consider these factors and conduct their own research before investing in Maker or any other cryptocurrency.
It’s also worth noting that trust in MakerDAO and MKR is closely tied to the success and stability of the broader decentralized finance (DeFi) ecosystem. The DeFi space is still relatively new and untested, and it’s possible that there may be unforeseen challenges or issues in the future that could impact the trust and stability of MakerDAO and MKR.
In conclusion, while MakerDAO has established itself as a secure and innovative platform in the DeFi space, it’s important to carefully consider the potential risks before investing in MKR.
How to get Maker (MKR)
Here’s a step-by-step guide to get Maker (MKR):
- Choose a cryptocurrency exchange: The first step is to choose a reputable cryptocurrency exchange that supports the purchase of MKR. Some popular exchanges include Binance, Kraken, and Coinbase.
- Create an account: Once you have chosen an exchange, you will need to create an account by providing your personal information and verifying your identity.
- Get a wallet: In order to store your MKR, you will need a secure digital wallet that supports the ERC-20 token standard used by Maker. You can use a hardware wallet, such as Ledger or Trezor, or a software wallet, such as MetaMask or MyEtherWallet.
- Add funds to your account: To purchase MKR, you will need to add funds to your exchange account. You can do this by making a bank transfer or by purchasing another cryptocurrency, such as Bitcoin or Ethereum, and then exchanging it for MKR.
- Buy Maker (MKR): Once your account is funded, you can navigate to the exchange’s trading page and place an order to buy MKR. You can choose to buy MKR at the current market price or place a limit order to buy at a specific price.
- Store your Maker (MKR): Once the purchase is complete, you will need to transfer your MKR from the exchange to your digital wallet to ensure the security of your funds.
It’s important to thoroughly research and compare different exchanges and wallets before making a decision, and to keep in mind that cryptocurrencies are highly volatile and can be subject to market risks. Always practice safe and secure storage of your digital assets.
Not sure about Maker (MKR)? Try Wellcoinex! Huge variety of different crypto to buy!
