Maker: Blockchain Token – What is it?

2 min read

This episode of Blockchain Token – What is it? covers Maker. 

Maker is a decentralized autonomous organization (DAO) that developed the Dai Stablecoin to deal with the problem of volatility that popular coins such as bitcoin and ether experience.

The large fluctuations that these coins can go through in a month or sometimes even in a day make them ineffective as an everyday currency. Why would someone spend bitcoin today if it could be worth twice as much tomorrow?

This lead to the creation of coins like Dai, that keep their value relativity stable compared to the US dollar. Dai’s value is stabilized by a dynamic system of collateralized debt positions on Makers’s smart contract platform. Anyone can create Dai by leveraging 1.5 times worth of Ethereum.

MKR is a volatile token that is used to govern the Maker DAO, and it is used as an utility token for Dai. Anyone can be be a part of Maker simply by holding the MKR token. Holders of MKR govern the system and can benefit if things are run well – or the opposite, if it is mismanaged. Through a continuous approval process each holder of MKR votes for risk management and logic of the Maker system. MKR is the only token that can pay for the fees accrued by Dai’s CDPs. Once spent, this MKR is removed from the total supply.

Maker DAO and Dai’s competition in the stable coin space include Tether, Basecoin and Havven.

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