MakerDAO, the blockchain-based decentralized stablecoin system that is backed by collateralized loans of Ether, has created a stable cryptocurrency using Dai. This platform allows users to convert their crypto holdings into Dai and take on debt, which is then repaid with interest in Dai. It has become one of the most popular stablecoins on the market. Here’s why MakerDAO is so revolutionary…
It is an Ethereum-based blockchain that enables users to manage the DAI stablecoin, pegged to the US dollar, which is known as the Maker Protocol, or Multi-Collateral Dai (MCD). It was conceived in 2015 and launched in December 2017 as a governance token for the Maker Protocol. The crypto started gaining traction at the end of December 2020. The coin went from $502 on 8 December 2020 to an all-time high of $6,339.02 on 3 May 2021, a gain of 1,162%. The coin has then retraced and is currently trading at $2,070.41 at the time of writing (18 January).
What’s next for the coin in 2022 and beyond? MKR price action has been volatile throughout 2021. Our goal in this article is to help you construct a plausible maker (MKR) crypto price prediction by analyzing the latest maker coin news and price drivers.
What Is The MakerDAO?
In 2014, MakerDAO, the organization behind Maker cryptocurrency, was created as a Decentralised Autonomous Organisation with the goal of providing cheaper, lightning-fast transactions through the Maker Protocol.
In the MKR whitepaper, Maker is described as one of the largest dapps on Ethereum. The protocol is managed by holders of its governance token, MKR.
A token called Maker (MKR) runs on the Ethereum blockchain according to ERC-20 standards.Governance system features executive voting and governance polling, which help manage financial risks associated with Dai – a Multi-Collateral Dai (MCD) system that allows users to generate DAI stablecoins – and ensures the system’s stability, transparency and efficiency.
Decentralised, unbiased DAI stablecoins are securely tied to the US dollar and are backed by collateral. It is compatible with Ethereum and other popular blockchains and functions like traditional money:
- Since DAI is a stablecoin, its value will not depreciate over time as it is designed to keep value even when the market is volatile. The DAI stablecoin can be used to buy, sell, or trade goods or services, making it a medium of exchange like prevailing currencies.
- One Dai is equal to $1, making it a standardised measure of value used to price goods and services. It is currently used as a unit of account in some blockchain dApps and Maker Protocol projects.
After its launch in November 2019, DAI is currently circulating on the crypto market for use in inflation protection and savings, games, digital art, and e-commerce.
“As the first unbiased stablecoin, Dai can generate financial independence for anyone, regardless of their location or circumstances, according to the project’s whitepaper.”
Why MakerDAO is the most exciting stablecoin?
Globally, government regulations weigh heavily on the crypto market’s performance, and deregulation may have a negative impact on maker cryptocurrencies in the future. Stablecoins could negatively affect Maker’s DAI performance, according to Federal Reserve governor Christopher Waller.
“This growth in usage of stablecoins and their potential to serve as a retail payment instrument has prompted regulatory attention, including a new report from the President’s Working Group on Financial Markets (PWG). This report urges the Congress to limit the issuance of ‘payment stablecoins’ to banks and other insured depository institutions,” said Waller.
It was confirmed in the PWG’s report that “well-designed and appropriately regulated stabilcoins could support faster, more efficient, and more inclusive payment options”. However, it also identified a variety of risks:
“Speculative digital asset trading, which may involve the use of stablecoins to move easily between digital asset platforms or in decentralised finance (DeFi) arrangements, presents risks related to market integrity and investor protection. Digital asset trading may be subject to market integrity and investor protection risks, including market manipulation, insider trading, front running, and a lack of trading and price transparency. Risks to the financial system may also exist when these activities involve complex relationships or significant leverage.”
Making Coin news, MKR token’s price surged above $4000 for the first time on 21 April 2021, which has put the crypto under the spotlight. The surge occurred after MakerDAO community members voted to accept an ERC-20 token representing an ownership stake in a pool of real estate assets as collateral.
The proposal allowed the Tinlake blockchain protocol to serve as a bridge between New Silver, a real estate loan company, and MakerDAO.
The MakerDAO protocol has integrated Gelato Network’s G-UNI Uniswap V3 token as collateral. G-UNI’s integration with MakerDAO could potentially result in higher revenue for MKR holders.
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Author
Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
