Since last week, Maker (MKR) caught the attention of Team Intraday again it reacted unusually following the collapse of Terra (LUNA) and TerraUSD (UST).
Why not spend time with the author to ‘dissect’ the potential of this token.
But before that, don’t rely on this reading alone but do your best to do external research-#DYOR yes!
Before getting to know MKR, get to know MakerDAO and Maker Protocol first.
Trivia Protocol Maker & MakerDAO
The Maker Protocol is one of the largest decentralized applications (dApps) in the Ethereum network
Also known as a Multi-Collateral Dai system (MCD)
MCD - allows users to generate DAI by leveraging collateral assets certified by MakerDAO
MakerDAO is a decentralized autonomous organization (DAO)
Has 2 native tokens:
MKR
DAI
Its community consists of MKR holders worldwide
They are the ones who determine the direction and stability of the DAI, including the Maker system
Trivia Maker (MKR)
Is the ERC-20 token standard
Has a supply limit of up to 1 million MKR
MKR is used to pay transaction costs in the Maker system and ensure the sustainability of the entire system.
The uniqueness of this token is that it is not mined like most coins
The production and elimination of MKRs depend on the volatility of the DAI price to ensure that it is always pegged to the US dollar
Trivia DAI
Is a stablecoin asset
According to the ERC-20 token standard, that means it also works in Ethereum just like MKR
Bound in U.S. dollars, 1 DAI = $ 1
Not controlled by anyone like USDT
How do MKR and DAI complement each other?
In fact the DAI is not directly dependent on the US dollar, just like most stablecoins such as the USDT and USDC.
But it is backed by other crypto assets that are locked in the Maker protocol as collateral.
This means, the production of DAI depends on the amount of other crypto assets put into the Maker Vault through the Maker protocol, and the excess collateral reflects the DAI that is in the market.
For example, investors put ETH into the Maker Vault to produce a certain amount of DAI directly into the market (usually the amount of collateral is higher than the amount of DAI in the market).
Subsequently, investors can buy, sell, or use these tokens as they normally would.
In fact, DAI can also be used as savings with the presence of the Maker protocol feature, Dai Savings Rate (DSR).
While MKR is used to maintain the system implemented, in addition to stabilizing the price of DAI.
If the price of DAI falls below $ 1, MKR will be produced and if the opposite happens, MKR will be burned.
MKR continues to be relevant
The use of the Maker system continues to be seen as still relevant to this day, again when MKR is used for meat export payments.
In fact, the introduction of the MCD system in 2019 allows any token according to MakerDAO-certified ERC-20 standards to be used as a collateral asset for DAI production.
To date, Maker recorded the highest total locked in value (TVL), $ 10.56 billion, surpassing Lido (LDO), Curve (CRV), and Aave (AAVE).
Yet investors should be cautious as DAI relies on secured crypto assets; meaning it can also be affected by the value of the crypto assets involved.
Anyway, make sure you study the Maker system concept first before making an investment! #DYOR
