Maker

What is MakerDAO (MKR)?

MakerDAO is a Decentralized Autonomous Organization (DAO) that operates on the Ethereum blockchain. MakerDAO was founded in 2014 with a goal to establish a decentralized system driven mostly by blockchain technology. MKR token holders have the right to vote in order to govern the Maker Protocol. The organization strives to solve financial problems in a decentralized way. One of these would be creating the Dai stablecoin, which is designed to keep stable despite fluctuations in the market.

What is Maker Protocol:

The Maker Protocol is the main framework that serves MakerDAO and allows its participants to generate Dai, a stablecoin based on decentralization backed by collateralization. It was first introduced in 2017 as Single-Collateral Dai (Sai) and later changed to Multi-Collateral Dai (MCD) in 2019, which allowed it to function under multiple Ethereum-based assets as collateral.

The Key Features MakerDAO

• Dai Stablecoin: DAI is a decentralized, disinterested peer-to-peer borrowing-backed stablecoin that is soft-pegged to the US dollar with price variations. 

• Maker Vaults: Under strict risk parameters (liquidation ratios and stability fees), these non-custodial vaults enable users to generate Dai by placing collateral assets.

• Decentralized Governance: The MKR holders are entitled to vote on risk parameters, collateral types, and system upgrades to ensure stability and efficiency in the system.

• Liquidation Mechanism: Risky vaults are liquidated by automated auctions as a mechanism of liquidation to maintain the system's integrity.

How Many Coin/Token Types Does MakerDAO Use?

MakerDAO operates on two coins MKR and DAI.

What is MKR?

MKR is the governance token of MakerDAO that allows voters to create agreements regarding the protocol configuration. In addition to its primary responsibilities, it performs secondary functions such as recapturing deficits from auctioning debts to the system. It ensures that the governance incentives align and the protocol runs responsibly.

What is Dai?

Dai is a decentralized stablecoin designed to maintain a 1:1 peg with a US Dollar price. Dai is created when a user deposits some collateral assets approved into Maker Vaults. It is a stable and accessible tool for various transaction savings and decentralized finance (DeFi) applications. Unlike almost all other stablecoins, this one has no central authority. That gives it absolute transparency and reliability in usage

What is SkyProtocol (SKY)?

SkyProtocol, a rebranded  version of MakerDAO, is a transformative step to decentralized finance (DeFi). Launched on September 18th, 2024, as part of the grand "Endgame Plan," SkyProtocol was designed to make DeFi more scalable, accessible, and resilient. The rebranding also introduced two critical upgrade offerings-the SKY governance token and the USDS stablecoin, which replaced MakerDAO's MKR and DAI, respectively. 

Key Features: 

SKY Governance Token: SKY takes over the place of MKR as the governance token and added functionalities together with new incentives. It was opened to existing holders of MKR to convert their tokens to this new governance token at a rate of 1 MKR = 24000 SKY with an option to revert. SKY introduces unique features like Sealed Activation and Regular Activation that rewards holders for active participation in governance and ecosystem building.

USDS Stablecoin: Sky Dollar (USDS) instead of DAI has a 1:1 USD peg and has been tailored for regulatory compliance and mainstream adoption. While DAI retains its issuance as a mode for DeFi-native users, USDS serves as a bridge between traditional finance (TraFi) and decentralized ecosystems.

Sky Stars Ecosystem: SubDAOs in the Maker ecosystem have been remade into independent entities called "Sky Stars" that will encourage innovation, yield opportunities, and decentralized growth. 

Strategic Vision: SkyProtocol is designed to appeal to a broader audience beyond crypto-native users by emphasizing accessibility, yield opportunities, and regulatory compliance. Although it faces community resistance due to loyalty to MakerDAO's brand, SkyProtocol strives to redefine decentralized governance and DeFi growth.

Where to buy an MKR token?

• Users can buy MKR tokens through CEXs and DEXs depending on preference, it is important to note that the following details are intended to provide you with the key differences.

• Centralized Exchanges (CEXs):CEXs such as Binance, Coinbase, Kraken, and KuCoin offer the option to trade for MKR tokens. These will allow users to easily trade MKR through a user-friendly interface using some of the largest stablecoins like USDT or fiat currencies such as USD, EUR, etc. Besides, it is also one of the most preferred due to its very low trading fee (0.10%) and high liquidity.

How to Buy on CEXs:

• Open an account on the site.

• Deposit fiat currency or other crypto.

• Look up for the MKR token (i.e. MKR/USDT pair).

• Place a market or limit order to buy MKR.

• Decentralized Exchanges (DEXs): For a totally decentralized option, go to Uniswap or Sushiswap, both of which require a crypto wallet like MetaMask or Trust Wallet to conduct transactions. DEXs are non-custodial for trading in MKR, which means you can trade your MKR directly for other ERC-20 tokens like ETH or stablecoins without using MKR in the process.

How to Buy on DEXs:

• Attach your wallet to the DEX.

• Swap your Ethereum or stablecoins (like USDC) to MKR.

• Confirm the transaction on the blockchain.

MKR (MakerDAO) Tokenomics and coin history?

The tokenomics of MakerDAO revolve around DAO token.The token plays an impotent role in governance, staking, and managing its ecosystem. The Token Generation Event (TGE) for the DAO token took place on February 9, 2021, at a listing price of $1.92. Since then, the token is at a per dollar ROI of 0.17x, indicating the early adoption difficulties.

MakerDAO used different investment rounds to build a solid footing for the financial foundation. The Initial DEX Offering (IDO) concluded on January 18, 2021, on Gate.io with a token price of $0.10, raising $300,000 and achieving 3.3x ROI. Similarly, the private sale in Q4 2020 and an IDO on the DAO Maker platform show that they ranged between $7.7 million and $100,000 at an equal token price of $0.10, also recording a 3.3x ROI in USD.

As for DAO tokens, there are unlock schedules tied to their allocation. All tokens from private sales and public sales have been released, while big portions allocated to team incentives and advisors have also been released. Thus, 25.58 million tokens stand as part of the whole DAO unlock supply for foundation-managed initiatives to ensure operational efficiency.

Fueled by distinguished venture capital firms such as GBV Capital, CoinIX, and Chain Capital, the funding strategy by MakerDAO is to sustain long-term growth and maintain the ecosystem.

As if 2024, Maker token (MKR) has reached an All-Time -Low of $168.36 on the 17th of March, 2020, and its All-Time-High is $6,292.31, which was reached on 4th May 2021.

Out of a total supply of 919.9K MKR, 891.1K MKR are in circulation. Total supply is capped at a maximum of 1 million MKR. The token has a market cap of $1.4B.

How Does MakerDAO Work?

MakerDAO, a decentralized organization, governs the ecosystem using the MKR tokens. The MKR token holders vote for various aspects, such as collateral types, technical upgrades, risk parameters, etc. Apart from DAO, the Maker protocol also involves some external entities to maintain the operations; they are 

• Keepers: Provide liquidity by engaging in arbitrage activities, like auctions, while Maker Vaults are liquidated.

• Oracles: Decentralized nodes that provide real-time price information on collateral assets in Maker Vaults to know the time of liquidation. 

• Oracle System Module (OSM): a security layer that delays the price feed by one hour so that it is time for holders to vote on freezing the coin in case of any attack. 

• Global settlers (Secondary Oracles): These are members voted by MKR holders who act as a last line of defense, as they have the authority to trigger an "Emergency Shutdown" during any critical threats to the system.

History of the MakerDAO?

The concept behind MakerDAO was first introduced by Rune Christensen on March 26, 2015, with the publication of “Introducing eDollar, the Ultimate Stablecoin Built on Ethereum.” The goal was to create a permissionless credit system where users could take out loans collateralized by cryptocurrency assets.

On December 10, 2017, Maker published its first white paper, titled "Dai Stablecoin System". Single-Collateral Dai (SCD), was also introduced. This system adopted Ether (ETH) as the only collateral for the first time through Collateralized Debt Position (CDP) smart contracts. Although this made the system functional and effective, Maker envisioned a broader future for this style of token as Multi-Collateral Dai (MCD).

On November 18, 2019, MakerDAO upgraded the version to MCD and added Basic Attention Token as a second collateral type. In this update, the following features were introduced: the DAI Savings Rate, which enables users to earn interest on their Dai holding; and Collateral Auctions, which enables risky positions to be liquidated.

Initially under the Maker Foundation, the protocol took the complete transition to a decentralized governance model on March 25, 2020, with governed by the MakerDAO community and MKR token holders.

In 2021, Maker embraced real-world assets (RWAs), integrating collateral like real estate loans and freight invoices. By 2023, the protocol launched its ambitious “Endgame Plan” to decentralize governance further, introducing SubDAOs, new governance tools, and plans for a dedicated blockchain. Today, MakerDAO remains a cornerstone of decentralized finance (DeFi), evolving towards a more self-sustaining and resilient system.