Maker (MKR) is a utility token, governance token and recapitalization resource of the Maker system.
- Volume (24h)
- Market Cap
- Fully Diluted Market Cap
- Circulating Supply
- 977,609 MKR
- Total Supply
- 977,631 MKR
- Trading Start
- 4 years ago
- Verified Liquidity
- % of Market Cap
- Number of Liquidity Pools
All You Need to Know About Maker protocol
Maker is one of the largest DeFi protocols built on the Ethereum blockchain. The main interface for the Maker protocol is called the Oasis app. It enables users to enter collateralized debt positions (CDPs) and generate decentralized, crypto-backed stablecoin Dai. The backing is covered by Ethereum-based assets, which Maker DAO approves.
Collateralized loans, as the name suggests, are entirely covered by collateral (deposited value serving as a guarantee for loan repayment). In other words, users cannot take out a loan bigger, than the initial deposit. This mechanism ensures that all borrowed capital created this way has some means of repayment.
In undercollateralized loans, a leveraged position is created and the collateral itself is not sufficient to repay the loan.
Dai - Collateralized stablecoin
By opening a so-called Vault in the Oasis app, users can deposit collateral and generate a portion of the stablecoin Dai, which is soft-pegged to 1 USD. The vault is a form of loan, meaning the user pays a certain annual interest rate and at some point has to repay back. There is no time limit in which the user has to repay, but the collateral will remain locked until he chooses to do so.
Because of the absence of volatility, Dai can be used as a means of trading, saving, or spending. The value of the collateral is constantly monitored and if it falls below a certain threshold ("liquidation ratio") the position can be liquidated. The collateral coverage required at this time is 170 % but is subject to changes.
Price stability mechanisms
To ensure that the price of Dai remains pegged to USD, Maker protocol utilizes a number of protective measures:
Market conditions - if there is a big demand for Dai, the price increases above 1 USD. Users will arbitrage this difference on exchanges and bring the price down until the arbitrage is no longer profitable. Sell pressure on Dai - price decreases - users will buy Dai on exchanges, rather than generating from the Maker protocol - price increases back to its peg.
Variable interest rate - when the demand for Dai increases, the interest rates also increase, lowering the demand. In the opposite direction interest rates decrease, making Dai essentially cheaper and thus increasing demand.
Usually, liquidation occurs, when the value of the collateral isn't sufficient to cover the debt - the position is immediately sold to prevent under-collateralization. When the CDP is sold this way, the user is charged a liquidation fee.
There are several steps involved in the liquidation process:
- The position is marked for liquidation, and an "auction timer" is started. This is a countdown timer that gives the owner of the position a chance to add more collateral.
- If the owner of the position doesn't add more collateral, the position is put up for auction.
- During the auction, the highest bidder wins the right to purchase the collateral. The winning bidder must pay the value of the position in Dai, and they receive the collateral (usually in the form of Ethereum) in return.
- If the auction does not produce a winner, the position is sold out to the open market to cover the remaining DAI.
Other features of the Maker protocol
Multiply: Allows users to create a leveraged position on certain assets up to 4x the original amount. In one transaction collateral is deposited, Dai is generated and swapped for more of the original asset. This of course increases the risk of liquidation.
Earn: In this vault, a portion of Dai is swapped for USDC and deposited on Uniswap V3 to the DAI/USDC liquidity pool, where it collects trading fees in a specified price range. It is also possible to multiply this position up to 50x.
Fees and interest rate
Maker protocol charges a variable stability fee in a form of an annual percentage rate. This stability fee is added to the debt and may change depending on the market conditions.
When CDP is liquidated, the user is charged a liquidation penalty, which is subtracted from the collateral. Size of the liquidation fee depends on the type of collateral used and decisions of the Maker DAO, typically 13 %. Further fees are associated with transactions on the Ethereum blockchain (gas fees).
Although being one of the oldest and largest DeFi protocols, one should still consider the risks resulting from the use of the Maker protocol.
Smart contract risk - a lot of trust is being put into code. Security bugs or exploit may occur while using any DeFi protocol. Regular audits and bug bounties help to mitigate this risk.
Liquidation risk - while entering a CDP users are subjected to the risk of liquidation and thus losing a substantial part of their position. It is necessary to maintain a safety margin in cases of swift market movements.
Depegging risk - the price of Dai can deviate from its intended peg. There are mechanisms in place to prevent this from happening but bear in mind that unexpected situations do happen.
Maker protocol is governed by the Maker DAO, which works through a continuous voting process that allows stakeholders to propose and vote on changes to the Maker protocol. Any stakeholder can submit a proposal, and all stakeholders can vote on the proposal using their Maker DAO governance tokens (MKR). The vote outcome is determined by the number of MKR tokens staked in favor of the proposal.
- Maker protocol enables users to enter collateralized debt positions (CDPs) to generate Dai
- Dai is a decentralized stablecoin (1 DAI = 1 USD) backed by Ethereum-based assets
- Users may use Ethereum-based assets as collateral to access liquidity without the need to sell those assets
- Anyone using CDPs is subjected to the risk of liquidation and deppeging
- Liquidation occurs when the value of the collateral isn't sufficient to cover the debt
- Maker protocol is governed by Maker DAO - members of the DAO create proposals and vote on changes to the protocol using MKR tokens
What is the price of Maker today?
One Maker coin can currently be purchased for approximately $1,437.96.
What is Maker smart contract address?
Maker official smart contract address is 0x9f8F72aA9304c8B593d555F12eF6589cC3A579A2.
What is Maker official website?
The official website of Maker is chat.makerdao.com.
What is the Maker Market Cap today?
Maker Market Cap is $1,405,759,353 today.
What's the last 24h Maker trading volume?
Trading volume of Maker in the last 24h was $3,329,022, which is approximately 0.20% of its current market cap. That means Maker has had relatively low trading activity in the past day.
How much money is in Maker Liquidity Pool?
There is $65,260,611 in - Maker liquidity pools. That's approximately 4.64% of Maker current Market Cap.
How many people are holding Maker?
There are 97,675 holders of Maker, which includes 62 large holders (wallets with more than 747K MKR)
How many followers does Maker have on Twitter?
249,042 people are following the Maker Twitter account @makerdao, which is 0.01% more than 30 days ago.
How many members does the Maker Telegram channel have?
Maker has 13,305 members on the @makerdaoofficial Telegram channel, which is 5.74% more than 30 days ago.
How many subscribers are there on Maker Reddit?
Maker has 33,926 subscribers on /r/makerdao subreddit, which is 0.00% more than 30 days ago.