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Cryptocurrencies

What is a $MKR token by Maker Protocol?

The Maker Protocol, also known as the Multi-Collateral Dai (MCD) system, allows users to generate Dai by leveraging collateral assets approved by “Maker Governance.” Maker Governance is the community organized and operated process of managing the various aspects of the Maker Protocol.

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Who Created the $MKR?

The Maker protocol is an open-source project started in 2014  by Rune Christensen, an entrepreneur from Sealand, Denmark with the goal of creating a permissionless credit system that would allow users to take out loans collateralized by cryptocurrency. These loans are created by smart contracts that mint Dai, a stablecoin with a soft peg to the US dollar. The protocol was built by the Maker Foundation along with a number of outside parties and over time the foundation has worked to reduce its level of control. 

How Maker Works?

Maker (MKR) is an ERC-20 token native to the Maker Protocol, a decentralised finance (DeFi) project which is also known as the Multi-Collateral Dai (MCD) system as it allows users to leverage assets to generate Dai – a community-managed decentralised cryptocurrency that tracks the price of USD.

Benefits of Maker 

  • Maker continues to see growing popularity mainly because it brings a lot of benefits to the market. This unique token serves multiple purposes within the Maker ecosystem. These functionalities add to the overall usability of this token. Here are some of the main benefits you gain when you hold MKR.
  • Community Governance: MKR holders are able to participate in the governance of the ecosystem. Community governance provides users with more control over the future of the network. In the Maker ecosystem, the decentralized governance mechanism relies on Active Proposal smart contracts.
  • Deflationary : MKR employs a deflationary protocol to help maintain its value over time. As part of this system, a small interest fee in MKR is due whenever a CDP smart contract closes. A portion of this fee gets burned. In this way, the system can maintain a healthy balance between the supply and demand of this digital asset.
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