DailyCoin
Published May 14, 2022 11:00PM ET
Updated May 14, 2022 11:30PM ET
Maker (MKR): Price Updates, Recent Developments, Future Events, Community
Maker (MKR) is the governance token of the MakerDAO and Maker Protocol, which allows users to issue and manage the DAI stablecoin.
Maker Protocol uses Maker Vaults, enabling users to deposit their crypto as collateral and mint Dai against it. Users with Vaults can then repay their Dai loan to redeem their collateral.
As Terra (LUNA) collapsed, dragging the crypto market with it, Maker (MKR) was one of the few cryptos to continue trading in the green. So, what was responsible for keeping Maker out of the red sea?
Recent Developments
One of Maker’s biggest goals is to finance off-chain business activities, something in which it has been steadily making strides. On May 9th, Maker announced that one of its vaults was used to finance a shipment of Australian beef to Hong Kong.
According to the announcement, the transaction was executed in partnership with Centrifuge – a protocol that allows users to finance real-world business activities with DAI.
ConsolFreight, a trade finance provider operating on Centrifuge, was also involved in the transaction, financing it by minting DAI via Centrifuge’s Maker vault.
While this marks growth in its real-world utility, the true driving force behind Maker’s upward price trajectory is the fact that its main rival, Terra (LUNA), is on the edge of collapse. Unlike TerraUST, which moves in sync with LUNA, Maker uses a system of overcollateralized vaults.
The Maker Protocol explains that it is for users who deposit 10 ETH in a vault. These users can only mint the DAI stablecoin equivalent of 5ETH (200% collateralization). Maker explains that if collateralization falls from 200 to 145% (in the event that the price of ETH drops), their vaults are liquidated, after which:
What happens during a liquidation event?Collateral is sold for the required amount of Dai to cover the outstanding debt + a Penalty Fee set in the Maker Vault parameters.After covering the debt and the fee, the remaining collateral will be available for withdrawal.6/Maker Protocol pays off Dai loans and closes Vaults to protect its collateral during a bear market. This infrastructure has kept the price of the DAI stablecoin truly stable, comparison to the methods employed by TerraUSD.Get The News You WantRead market moving news with a personalized feed of stocks you care about.Get The App— Maker (@MakerDAO) May 12, 2022
Future Events
Recently, Instadapp released Dai Vault integration to its ‘Lite’ version, allowing users to start earning up to 5.7% APY on their Dai investments.
Maker will host its first Twitter (NYSE:TWTR) Space on Friday, May 13th, at 16:00 UTC to enlighten its community. The Instadapp team will also be involved, and will talk about their product and the integrations with the Maker Protocol and Dai.
Price Updates
Despite the week-long downtrend experienced by the market at large, Maker (MKR) has been one of the few cryptos that remained in the green. In the last 24 hours, MKR has gained 30% in value, and is up by much as 48% in the last 48 hours.
The 1 day price chart for Maker (MKR). Source: CoinMarketCap
Maker is the only crypto in the top 100 to post gains in the last week. Maker (MKR) is up by 10% for the last seven days, while market leaders like Bitcoin (BTC), Ethereum (ETH), and Binance Coin (BNB) are down by ∼20% or more.
The 7 day price chart for Maker (MKR). Source: CoinMarketCap
After hitting an interday high of $1,747.71, Maker is trading at $1,460, as of this writing. Maker is now ranked as the 43rd largest cryptocurrency, with a market cap of $1.43 billion.
On the Flipside
Community
As a decentralized stablecoin, the community behind Maker is taking it to the top. Its holders directly participate in the governance process of the coin, and voting power is dependent on inidividual commitment to the project, based on the amounts staked.
With the crash of UST, the Maker Protocol community has found renewed belief that their stablecoin outclasses others. Twitter user @UncleRewards wrote:
I think $MKR deserves some respect bids for how great Maker has handled the last few days of EXTREME market conditions. Protocol still chugging along, just as the big brains designedIn a thread discussing the fundamental reason for the UST crash, and comparing it to Maker’s protocol, Sonystinha Isentão shared:— Uncle (@UncleRewards) May 12, 2022
Their pegging system was weak and it was always known, it uses a single volatile asset to hold it. Maker had issue with it and had to mint and sell MKR to recover their collateral, but DAI peg was never lost. And their issue was relying on ETH which is used on many other servicesBullish about the future of MKR, @cryptolife_shop wrote:— Sonystinha Isentão (@SonystaIsento) May 13, 2022
Maker is doing pretty well with $DAI after this $LUNA disaster. I think USD 2000+ is possible for $MKR within the next days.Why You Should Care— CryptoLife.Shop (@cryptolife_shop) May 13, 2022
The over-collateralization structure adopted by the Maker Protocol ensures that there is always enough liquidity to cover the minted DAI token, Thereby preventing the de-pegging and collapse of its stablecoin, as has happened to TerraUSD.
Continue reading on DailyCoin
Written By: DailyCoin
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.