This week, Coinbase added Maker (MKR) the platform, and I realized that I don't know much about it, only that Maker ... makes DAI ... doh !!! With the current price around $450, and a market cap at nearly $450 million, is predicted that Maker will become quite popular on the platform.Whenever I hear Maker, I instantly think about Shayne Silvers amazing work and the Nate Temple Universe, and after that, about 3 days later, at the Maker Protocol which allows users to generate Dai by leveraging collateral assets.
What is Maker?
MakerDAO is the name of the open-source project on the Ethereum blockchain and a Decentralized Autonomous Organization created in 2014. The project is managed by people around the world and aims to ensure the stability, transparency, and efficiency of Dai. The Maker Protocol, built on the Ethereum blockchain, enables users to create Dai, a decentralized, unbiased, collateral-backed cryptocurrency soft-pegged to the US Dollar, resistant to hyperinflation due to its low volatility. The Dai stable-coin succeeds where Bitcoin failed, because Dai is designed to minimize price volatility, being part of a wider industry movement for stable-coins, to maintain price value and function like money. The Maker Protocol came up with the solution for the eternal quest to replicate the value of fiat currency.
How Maker creates Dai?
The Maker Protocol is one of the largest dapps on the Ethereum blockchain. Designed by a disparate group of contributors, including developers within the Maker Foundation, its outside partners, and other persons and entities, it is the first decentralized finance (DeFi) application to see significant adoption.
Dai is easy to generate, access, and use. As seen in the above video, the clients will generate Dai by depositing collateral assets into Maker Vaults within the Maker Protocol.Others obtain Dai by buying it from brokers or exchanges, or simply by receiving it as a means of payment. Dai can be used as payment method and every Dai in circulation is directly backed by excess collateral, meaning that the value of the collateral is higher than the value of the Dai debt, and all Dai transactions are publicly viewable on the Ethereum blockchain. The Dai can be used for all four functions off money: store value, a medium of exchange, unit of account and a standard of deferred payment.
How Maker controls the Protocol?
The Maker Token (MKR) is the governance token of the Protocol, and allows those who hold it to vote on changes. In addition to its role in Maker Governance, the Maker Token has a complementary role as the recapitalization resource of the Maker Protocol. If the system debt exceeds the surplus, the MKR token supply may increase through a Debt Auction to recapitalize the system, making Maker holders to align and responsibly govern the Maker ecosystem to avoid excessive risk-taking.
MKR holders can approve new assets as collateral, however those assets will be subject to the same risk requirements, parameters, and safety measures as Dai, regarding to liquidation ratios, stability fees and savings rates.
What the future holds for Maker?
Dai, as a cryptocurrency with price stability, serves as an important medium of exchange for many decentralized applications. As such, the potential market for Dai is at least as large as the entire decentralized block-chain industry. All markets and all industries can take advantage of the low volatility which can increase Maker's global spread and reputation. Maker and Dai can improve merchant receipts, cross-border transactions, and remittances, making foreign exchange less volatile. The lack of intermediaries mean the transaction costs of international trade are significantly reduced when using Dai.
Charities and NGOs can improve transparency if they will use distributed ledger technology while the gaming industry can integrate Dai as a currency or as an entire economy, allowing to create new player behavior schemes based around decentralized finance. Using crypto for betting and gambling can risky but can be improved if the Dai stable-coin would be the choice in prediction markets.
MakerDAO was the first project to run reliable Oracles on the Ethereum blockchain, and as a direct result, decentralized applications are using MakerDAO Oracles to ensure the security of their systems and to provide up-to-date price data in a robust manner.
At today's price of £414 ($450), Maker is one of the most valuable crypto-coins on the market. Considering the launch price, £16.85 and the 2020 value, than I assume this was a good medium to long term investment, specially for those who sold in January 2018, when the MKR coin registered the all-time-high, peaking at £1276.In the last 12 months, Maker was relatively stable, with one surge to £632, minor ups and downs, and a huge drop in March. From the depths of £144.44, Maker recovered quickly and went over £400 in less than 3 months.June was a month of growing and keeping the momentum, with a high on the 11th, at £584. The price correlation measures the tendency of other prices to change at the same time as MKR, and VeChain, district0x, Loom and BAT are moving together.
With the help of the Maker Protocol, users can generate Dai, which will always match the value of fiat money. Backed by hundreds of partnerships and one of the strongest developer communities in the cryptocurrency space, MakerDAO has become the engine of the decentralized finance (DeFi) movement and will maintain this position in the market for years.
The confidence in MakerDAO and the Maker Protocol means that Maker Governance can expand the core Oracle infrastructure service to better suit the needs of decentralized applications which will unlock the power of the block-chain to deliver economic stability and empowerment.
As an investment, Maker doesn't look so attractive, specially because of the high price per unit. As an entity that aims for stability and low volatility, only long term investment may bring profit.
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