About Maker (MKR)

Maker is a smart contract lending platform; MKR is the governance token supporting it.

MKR holders govern the Maker Protocol, the smart contracts that power DAI.

What’s DAI? That’s an Ethereum-based, dollar-pegged stablecoin. 

How DAI connects with MKR (and vice versa) can be confusing.

The DAI token is the lifeblood of the lending platform MakerDAO. MakerDAO issues DAI, on the Ethereum blockchain, through a system of smart contracts designed to respond to market dynamics. The MakerDAO lending system makes loans – collateralised debt structures –that rely on DAI to lock in collateral.

It has been in this capacity that DAI has grown to become one of the most actively used stablecoins. MakerDAO accepts multiple assets as collateral for DAI loans including WBTC, ETH, BAT, USDC, and USDT.

DAI exists for one reason: to facilitate the lending platform founded by the Maker Foundation in 2015. This project was the brainchild of Rune Christensen of Denmark.  He envisioned an open-source system to offer non-discriminatory financing opportunities to anyone, anywhere.

MKR, on the other hand, exists for two reasons. At its core, as mentioned, it facilitates Maker governance, which is conducted by way of smart-contract-abetted voting initiatives (polls) on decisions relating to the development of the protocol.

But MKR has one additional, crucial function: recapitalization. If the lending system's debt becomes greater than the surplus MKR on hand, then additional MKR tokens can be minted by the protocol and sold for Dai to help keep the ecosystem solvent.

The stability of DAI/USD peg is maintained by the MKR tokens (burned or issued) based on the smart contracts designed to defend the peg’s integrity.

During the second half of 2020, stablecoin demand surged among DeFi yield farmers, proving to be a test of MakerDAO’s ability to defend the DAI/$1 level after zero interest rates failed to curb demand.

Andreessen Horowitz, the venture capital giant, became a shareholder in MakerDAO in 2018. At that time, the firm became a significant MKR holder.

What is the price of MKR?

As of early February, MKR was valued at roughly $1,600. That amounts to a market capitalization of roughly $1.6 billion. Recent market activity has seen MKR’s average daily volume exceed $200 million. 

There are 995,692 MKR tokens in circulation out of the total number, roughly one million, in existence.   

The current price of MKR represents a 275% increase just in January of 2021. This dramatic rally was a delayed reaction to a surge in DAI creation. During the summer of 2020, with an intense interest in DeFi, MKR remained relatively unchanged as DAI rates were kept near zero to ensure stability. As MakerDAO allowed interest rates to rise, the price of MKR began its ascension.