Before trading any crypto assets it is important to understand the risks. This overview summarizes certain risks associated with MKR.
No securities regulatory authority has expressed an opinion about MKR, including an opinion that MKR itself is not a security and/or derivative.
Token Description & Project Background
MakerDAO is part of an Ethereum-based protocol that operates as a platform for issuing DAI, a stablecoin designed to maintain a value pegged to the U.S. dollar. Alongside this, MakerDAO enables users to access collateralized loans without the need for intermediaries. When users generate DAI, they incur a stability fee, and the interest payments are distributed to holders staking the MKR token.
The governance of the MakerDAO platform is entrusted to holders of the MKR token. Through staking MKR tokens, users gain the ability to vote on various protocol parameters, including stability fees, collateralization rates, approved collateral assets and protocol development. Additionally, MKR holders play a crucial role in serving as a safeguard in case the provided collateral experiences a significant decline in value. In 2017, MKR tokens were privately sold to prominent investors, with Andreessen Horowitz and Polychain Capital leading the investment round, raising approximately US$12 million.
Rune Christensen, the founder of MakerDAO, initiated the project in 2015. Prior to his involvement with MakerDAO, Christensen co-founded Try China. Another key member of the team is Matt Richards, formerly the Marketing Director of Audience Science and Playdom. Together, they have contributed to the development and growth of MakerDAO.
Risks of MKR
Like an investment in other crypto assets, there are some general risks to investing in MKR. These include: (i) volatility risk and liquidity risk, (ii) short history risk, (iii) demand risk, (iv) forking risk, (v) code defects, (vi) regulatory risk, (vii) electronic trading risk, and (viii) cyber security risk. For additional information of these and other general risks associated with crypto assets and Uphold’s platform, please refer to thestatement.
In addition to these general risks, an investment in MKR is subject to the following specific risks:
- MKR operates using smart contracts, which have an association with vulnerabilities and security breaches. Despite undergoing successful audits by well-regarded third-party entities, it is essential to acknowledge the existence of inherent risks. Furthermore, the project’s future trajectory hinges on the decisions made by a global community of MKR token holders.
We emphasize that this Crypto Asset Statement is not an exhaustive description or summary of all risks associated with MKR. Investors should conduct their own research and perform their own assessment before trading any crypto asset to determine the appropriate level of risk for their personal circumstances.
The MKR community and Maker Foundation are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of MKR have no recourse to MakerDAO, Maker Foundation or Uphold if MKR declines in value for any reason.
Changes to applicable law may adversely affect the use, transfer, exchange, or value of any of your crypto assets, and such changes may be sudden and without notice.
Uphold’s Evaluation Process
Prior to listing MKR on the Uphold Platform, Uphold performed due diligence on MKR and determined that MKR is unlikely to be a security or derivative under relevant securities legislation. Uphold’s analysis including reviewing publicly available information on the following:
- The creation, governance, usage, and design of MKR, including ensuring the source code is open-source, audited and peer reviewed, security, and roadmap for growth in the developer community.
- The supply, demand, maturity, utility, and liquidity of MKR.
- Any marketing materials put forward by the MKR social team including on, Twitter, Medium blog, LinkedIn posts, Discord and Telegram channels.
- Material technical risks associated with MKR, including any code defects, security breaches and other threats concerning MKR and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them.
- Legal and regulatory risks associated with MKR, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of MKR.
Uphold has prepared this Crypto Asset Statement based on publicly available information. Although Uphold has taken steps to obtain information from apparently reliable sources, information contained in this Crypto Asset Statement may be inaccurate, incomplete or out-of-date. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.
Uphold users should read thestatement for additional discussion of general risks associated with crypto assets made available through the Uphold platform.
Canadian residents, please note that Uphold has filed an application for registration in certain Canadian jurisdictions but has not yet obtained registration. Until such time as Uphold obtains registration, Uphold has agreed to abide by the terms of an undertaking available at the following. Please also review the for additional discussion of general risks associated with the crypto assets made available through Uphold Platform. Please be aware that statutory rights of action for damages or rescission in section 130.1 of the Securities Act (Ontario) and, if applicable, similar statutory rights under securities legislation in the other provinces and territories of Canada do not apply in respect of this Crypto Asset Statement or other disclosures on the Uphold website and statement.
Last updated on June 21, 2023.
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