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TYPE Crypto
GROUP Majors
BASE Maker
SECOND
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MKR/USD Signals

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Maker and Dai keep progressing higher, following the boom of DeFi Full Article
3 yrs
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About Maker (MKR)

Maker had a stellar start to 2021, supported by the rally in the overall crypto market that began in late 2020, rising from close to $600 in January all the way up to above $6,000 in May. The rising interest among investors in the decentralized finance (DeFi) space helped MKR post significant gains through the initial months of the year; however, the crypto market crash in mid-May brought Maker price crashing down from its recent highs.

Despite the reigning uncertainties in the wider crypto sector, Maker ranks 37 in terms of its market capitalization as per CoinMarketCap data and remains well above the all-time low value of around $21 from back in January 2017. As of June 2021, Maker's TVL stands at just under $6 billion, indicating strong interest in the Maker ecosystem, which is one of the first and more stable DeFi projects. With the expansion of the DeFi ecosystem slated to continue and speed up in the near future, it is highly likely that Maker will remain supported and attain greater heights.

Maker Breakdown

The Maker platform is a decentralized autonomous organization (DAO) which operates on top of the Ethereum blockchain network and the MKR is an ERC-20 token built using Ethereum protocols. The Maker (MKR) token is used within the MakerDAO ecosystem to maintain the stability of its DAI token and for governance within the Dai Credit System. It is one of the two tokens that operate on MakerDAO - while DAI acts as a stablecoin, it is the MKR that plays an important role in keeping the DAI stable and away from the volatility that most of the other cryptocurrencies are subject to. In this manner, essentially, the MKR token works to counter price fluctuations to keep DAI's relation with the dollar stable.

MKR tokens are created and burned based on the value of other leading cryptocurrencies in case their prices change too sharply and the DAI system is unable to handle the increased levels of volatility. MakerDAO allows users to take loans against other crypto assets; however, if the value of the loaned asset falls suddenly and the collateral cannot cover the value of DAI, MakerDAO generates more MKR tokens and sells them to the market to build up collateral.

MKR token holders can leverage their holdings for voting rights on the platform's continuous approval voting system. The token is also used to provide incentives to users to increase governance activities on the platform.

Maker History

The origins of Maker can be traced back to 2014 when it was first conceived but it took more than two years since then for a full launch, which occurred in December 2017. Maker is an open-source project developed with the vision of supporting a permissionless credit system to allow users to take loans against their cryptocurrency holdings.

MakerDAO was the first entity within Maker and was created by Denmark-based entrepreneur Rune Christensen. Developed by the Maker Foundation, it also has a number of external participants that own MKR tokens, giving the ecosystem the decentralization needed for its operation. Over time, the Maker Foundation has been reducing its level of control and ceding it over to the DAO.

Maker was conceptualized to operate a stablecoin - DAI, whose price will not fluctuate as drastically as other leading cryptocurrencies, being managed by the community and enjoying a soft-peg to the US dollar. The first version which launched in December 2017 was called Single Collateral Dai (SCD) as it started with only offering the option to use Ethereum as collateral.

Following this, the Maker Ecosystem Growth Foundation underwent a restructuring in April 2019. In November 2019, MakerDAO upgraded to MCD, adding Basic Attention Token (BAT) as collateral in addition to Ethereum. MCD also brought about the concept of Dai Savings Rate (DSR) to allow token holders to earn yield and collateral auctions to boost liquidations. About a year later, in December 2019, the control of MKR tokens was transferred after which the on-chain upgrade occurred in February 2020 to roll out the governance security module (GSM).

Maker Price Factors

The Maker price is influenced by several factors that impact the MakerDAO ecosystem directly as well as the wider cryptocurrency market as well. As a digital asset, one of the biggest factors that affect the MKR rate is the sentiment in the overall crypto market, especially changes in the price of market leader Bitcoin. Negative news in the media about cryptocurrencies in general or about Bitcoin tend to drive investors away from the market, driving a decline in the MKR price. On the other hand, positive news about higher adoption and interest in cryptocurrencies or developments that drive up the value of Bitcoin can influence the Maker rate in a positive manner, helping it climb higher.

The MKR price also varies based on the overall activity and marker conditions in the DAI ecosystem. When there is an inadequate supply of DAI during liquidation, new MKR tokens are minted and when the supply increases, its price declines. On the other hand, a higher number DAI tokens drives Maker to burn MKR tokens, which in turn can drive the MKR rate higher.

Trading Maker

In addition to being used within the Maker ecosystem, MKR is available for trading on popular crypto exchanges. In order to trade MKR, find a reliable exchange or broker that offers MKR among their listings and sign up for an account. Some of the exchanges that offer MKR for trading include Binance, OKEx, Coinbase Pro, Gemini and OKEx.

You can then convert your trading capital from fiat into cryptocurrency to buy MKR. The next step is to perform careful technical and fundamental analysis and observe the MKR chart for trade ideas, so you can perform buy or sell actions based on market conditions.

MKR/USD - FAQs

What is Maker?

MakerDAO is a popular DeFi platform and the MKR token, also known as Maker, maintains the stability of the platform's DAI token. It is also used for governance within the ecosystem and is available for trading on leading cryptocurrency exchanges.

How can I trade Maker?

You can trade Maker by looking up which cryptocurrency exchanges and brokers offer this instrument as part of their portfolio and open an account with the one that is best suited for you. You can then convert fiat currency into trading capital and use it to buy MKR tokens on the platform. Through regular monitoring of the Maker chart, you can then enter into trades to either buy or sell MKR based on the price action.

How can I store Maker?

You can store your Maker tokens in any crypto wallet that supports ERC-20 tokens, including MyEtherWallet, Trezor, Ledger Nano S, Trust and Exodus. Choose between a hardware and software wallet based on the level of security you desire and the frequency with which you will access your holdings.

What can you buy with Maker?

Maker is used to maintain the MakerDAO ecosystem and support the stability of its DAI token. In addition, MKR holders can participate in governance and voting within the MakerDAO platform. Unlike other traditional cryptocurrencies like Bitcoin that are used for transactional purposes in the digital space, MKR can only be used within the MakerDAO ecosystem for governance purposes. You can also buy other cryptocurrencies with your Maker holdings while trading on crypto exchanges.

Is it legal to buy Maker?

Most countries worldwide allow their citizens to buy and sell cryptocurrencies, including Maker. However, there are some countries that have imposed a ban on the use and trading of digital assets. It is recommended that you perform research to understand the regulations around cryptocurrencies within your country before you buy Maker.

Is Maker regulated in the UK?

The UK has so far not implemented any regulations exclusively for cryptocurrencies, although it does allow its citizens to buy, sell and trade in them. However, regulations are dynamic and subject to change, so we recommend you read up on the latest developments related to crypto regulations before getting started withholding and trading Maker.

What are the risks in trading Maker?

As mentioned above, Maker differs from other cryptocurrencies in that it finds limited use within the MakerDAO ecosystem, which caters to the DeFi space. Any downfall in investor interest or the clampdown of the DeFi ecosystem can hurt Maker immensely, even more than the impact on other leading cryptocurrencies that have several other applications. To minimize risk while trading Maker, it is essential to do your homework, read up and understand how the Maker token works, the latest developments related to Maker as well as the overall crypto market, and stay updated about the latest regulations in this space. This will help you make more informed trading decisions and reduce your exposure.