MakerDAO is a decentralized cryptocurrency platform built on the Ethereum blockchain. The platform is a contract lending platform that allows users to lend and borrow cryptocurrencies without the need for a middle man. Borrowing and lending on the platform are managed by a smart contract service and the two native currencies, DAI and MKR, which regulate the value of loans.

MakerDAO Developers

MakerDAO was founded in 2015 by the Maker Foundation. Rune Christensen, an entrepreneur from Sealand, Demark, created the digital coin platform, which becomes the first major entity inside the larger Maker ecosystem. In 2017, MakerDAO launched the Maker governance token (MKR) and its first stablecoin iteration known as the Single Collateral DAI (SAI). SAI used Ether as collateral. In 2019, the foundation released DAI, to replace SAI. 

Operations

The two tokens, DAI and MKR, stand at the heart of MakerDAO. DAI is mainly used as a stable coin, which is pegged to the USD through supply and demand. Crypto traders and holders can add DAI to their portfolios to mitigate the effect of the fluctuation in the cryptocurrency market.

The Maker Protocol’s loan functionality is based on smart contracts on the Ethereum network, which is referred to as collateralized debt position (CDP) or Maker Vaults. When users want to borrow funds on the MakerDAO platform, they deposit any supported cryptocurrency as collateral to be held in Maker Vault and receive their loans in newly minted Dai relative to their collateral. The loan can be paid back anytime in return for the collateral.

If the value of the coin is deposited as the collateral drops, the Vault will liquidate the collateral to secure the loan. Meanwhile, when the loans are paid back, the Dai tokens are automatically burned.  Dai can also earn the holders Dai Saving Rates (DSR) if they lock them in dedicated smart contracts where the borrowers can access the funds. The token is also compatible with most Ethereum-based daaps since it is built on the Ethereum network.

On the other hand, the MKR token serves two main purposes on the MakerDAO network. It is a governance token that enables the holders to vote on network specs and government initiatives such as collateralization rates and stability fees. Additionally, MKR tokens act as a backdrop cover for MakerDAO if it runs into bad debts. If the collateral held in Maker Vaults is insufficient to cover the loans, MKR is created and sold in debt auction to raise the amount of collateral.

Applications

People use Oasis. app to deposit cryptocurrency collateral into a Maker Vault to create to generate DAI. Dai holders can use it to pay for goods and services in a stable currency without having to sell their underlying collateral assets such as ETH or wBTC. Some people also buy Dai or receive it from friends and family. Once it is in the wallet, the owner can use it in multiple ways including seeking stability, saving, purchasing goods and services, or engaging with a wide variety of DeFi apps. small-to-medium-sized businesses use Dai for daily payments.

MKR holders have the right to vote on critical governance decisions such as how high to set the fees and even the collateral types to accept. One token equals one vote; hence, members with large MKR holdings have a large influence on voting outcomes.

Buying MakerDAO

You can obtain MKR tokens from exchanges such as Binance, OKEx, Uniswap, and Coinbase Pro. MKR can also be acquired by participating in protocol auctions. 

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