About Maker
Overview of Maker Platform
Maker is a unique decentralized platform on the Ethereum blockchain, which is designed to create stablecoins dependent on fiat currencies and other real assets. The future plans of the Maker developers to create a cryptocurrency exchange. On the exchange, it will be possible to trade stablecoins based on Ethereum smart contracts. The practical implementation of the project was the Maker DAO platform.
It is used to create cryptocurrencies on the ERC-20 protocol with reference to fiat. There is already a ready-made example - the DAI token. The coin has a strict dependence on the US dollar exchange rate, the price difference with which cannot exceed 5%. Dai tokens are backed by cryptocurrency collateral and cannot be issued uncontrollably.
How DAI Tokens Work
A person who wants to buy a coin opens an application, in the automatic mode, the platform takes ETH cryptocurrency from him as a deposit, and return DAI. If the reverse process occurs, then the token burns out. In this way, Maker will always reinforce the coins with other crypto assets.
Role of MKR Token
For full operation, the DAO platform must use “fuel”. This fuel is MKR. The token can artificially change the price to maintain the course of stablecoins on the platform. MKR is also a token to attract investment in the project. The coin represents the maker platform on exchanges and is also used as a fee for internal commissions.
Compared to most stablecoins, the internal Maker DAO tokens are secured by real assets.
If you think that the market already has enough stablecoins of at least a dollar, and the Maker DAO, DAI, and MKR project is just another in this line, there are several fundamental differences. Compared to other cryptocurrencies, DAI is tied to a relatively stable fiat and is deprived of sharp changes in the exchange rate like Ethereum or Bitcoin.
This does not apply to the MKR internal token. As we wrote above, MKR is a token that ensures the stability of internal coins through complex mathematical formulas in smart contracts. This means that he has high volatility. This is not a disadvantage, because traders can earn on such changes. It is impossible to mine the internal token, it has already been issued in full. Moreover, with each transaction, MKR will be burned, which should increase the value of the coin.
Market Presence and Challenges
Now the coin can be bought on popular exchanges, including OKEx, Gate.io, and KuCoin. Tokens can be stored on any ERC-20 standard wallet. Most investors and traders see the Maker project only as MKR coin. And MKR has several drawbacks. Firstly, the internal blockchain token for stablecoins is based on the Ethereum blockchain and is highly dependent on the ETH course. In addition, malfunctions of the Ethereum blockchain will provoke problems inside the Maker DAO.
For traders, the disadvantage is low capitalization and weak trading. Many are also embarrassed by the slow development of Maker, since apart from DAI no new stablecoins have been released yet, and working on the project’s own exchange is also a big question.
Nevertheless, the community warmly perceives the stablecoin platform, as against the background of strong market volatility, it needs stable and reliable coins. Interest in MKR currently provides the DAI token. And with the launch of new similar coins, this interest will grow. To keep track of the Maker project and MKR token, read Neironix io.