Today we will talk about what Maker cryptocurrency is and how it differs from others. MakerDAO is considered one of the important startups in the crypto space. It is a decentralized toolkit for creating a stable token that allows maintaining the value of a certain price threshold guaranteed by the design of the mechanism. In other words, this means that with the help of MakerDAO, you can create a token that is protected from the severe exchange rate volatility.
A stable token like this, for example, will always cost more than $ 1, allowing a person to hold their funds in such stable tokens instead of the risks that have recently affected the seemingly immobile giant Tether (USDT).
And similar to many of the best blockchain schemes, Maker (MKR) is essentially difficult and therefore needs a full report to fully understand.
MKR is a utility token with a small twist.
How does Maker work?
Maker is a decentralized autonomous organization built on Ethereum on which the MKR token operates along with Dai:
- This is a great example of how many impressive products and services people can create with the Ethereum smart contract platform. Maker exists to reduce the volatility of the Dai price against the US dollar.
- For example, when you create 100 Dai with your $ 150 Ethereum, Ether will be tied to a Collateralized Debt Position (CDP), which is a program that allows a smart contract on the Maker to set aside your capital.
- As soon as you transfer your 100 Dai coins, you will be given $ 150 worth of Ether, but Dai will be “burned” as a component of this manner.
How does MKR token work?
Now that we understand the main message of the Dai token and how it all works, we can take a closer look at how the MKR token fits into the picture.
Maker works as a management token or utility token, which also functions as a recapitalization resource for the Maker network.
The service features of MKR are based on the idea that it is the unique token that can be applied to give CDP production fees to generate Dai. There are about 530,000 MKR in transmission and whenever they are applied to give charges the MKR is used and consumed.
As more and more MKR is burned, its value will increase and it will take less time to complete transactions.
The management aspect of MKR is based on its use for voting. MKR holders can vote on any solution proposed to modify the Maker Network or to create such proposals.
Voting takes place regularly, and the proposed proposals are usually related to the parameters of risk control and security. There is also a delay between voting results and implementation to prevent bulk purchases of MKR for malicious voting. In this sense, MKR can be viewed as stock and property in the Maker community.
Maker also relies on its community of MKR owners to enforce its privacy policy and operates on the assumption that they will use common sense. This is where the final aspect of MKR as a recapitalization token comes into play.
If Maker does not perform well as a management tool, an automatic recapitalization will occur, resulting in insufficient collateral support for the CDP. In such cases, the Maker system will generate additional MKR tokens to be sold, which will raise capital for additional collateral. As conclusion, MKR is reduced and its rate leaves.
How to buy MKR
You will need Ethereum to buy MKR. So you can forget about buying for fiat funds. If you have enough Ether, you can use EtherDelta to make mkr to btc exchange.
You can store MKR exactly on the same multi currency crypto wallet where ether is stored.
Output
The maker can be truly a cryptocurrency, in the very original sense of the word. This token is conveniently suited for storage of funds with confidence in protection against sharp fluctuations in the exchange rate, as well as for a simple means of payment in the Ethereum ecosystem.