Maker Coin: A Smart Investment Decision?

Maker (MKR) is a governance token of the MakerDAO and Maker Protocol, which are both decentralized organizations and software platforms built on the Ethereum blockchain. It is also the main utility and governance token for the decentralized lending platform, Maker. The Maker Protocol features two main tokens: the DAI stablecoin and MKR governance tokens. DAI is fully decentralized and used on the protocol to fund and facilitate loans, while MKR is used by the community to run and govern the protocol.

MKR is a decentralized ERC-20 token that represents an investment in the Maker Project. It is highly decentralized, secure, and transparent. It is also available on multiple exchanges, has a high trading volume, and has a high market capitalization. These factors make MKR a good investment option. However, cryptocurrencies, including MKR, are highly volatile assets, making them high-risk investments. Therefore, it is essential to conduct due diligence before investing in MKR or any other cryptocurrency.

Maker's (MKR) decentralised nature

Makers (MKR) Decentralised Nature

Decentralisation is a vital component of all cryptocurrencies, and it is the most important aspect of the digital currency world. It allows all participants equal freedom and opportunity to influence decisions in a particular blockchain. This freedom essentially means that no one person can control one currency, as is the case with conventional centralised financial systems.

Decentralisation enhances the level of trust in the network since there is no one controlling authority, as is the case with centralised entities. Every participant in such a network has an exact copy of the available data and can, therefore, monitor any other member of that network.

The Maker Protocol, also known as the Multi-Collateral Dai (MCD), is an Ethereum-based blockchain that allows users to issue and manage the DAI stablecoin, pegged to the US dollar. Maker (MKR) serves as a governance token of the Maker Protocol.

The Maker Protocol is managed by people who hold its governance token, MKR. MKR holders are able to stake their MKR tokens in order to vote on proposed changes to the Maker Protocol, as well as ensure the efficiency, transparency, and stability of Dai.

The MakerDAO is a decentralised autonomous organisation (DAO) made entirely of MKR holders from around the world. It was created in 2014 by Rune Christensen, a Danish entrepreneur and graduate of the University of Copenhagen.

The Maker ecosystem was one of the first DeFi projects to achieve significant success – a testament to the effectiveness of truly decentralised governance. It is one of the largest decentralised applications (dApps) on the Ethereum blockchain.

The DAI stablecoin is a decentralised, unbiased, collateral-backed cryptocurrency soft-pegged to the US dollar. It is supported on Ethereum and other popular blockchains and functions similarly to traditional money. It can be used to sell, purchase, or trade goods or services, making it a medium of exchange like prevailing currencies.

The Maker Protocol generates new Dai through smart contracts known as Maker Vaults. These contracts can be created through various web UIs and apps that essentially act as portals to access the network through. When a user wants to retrieve their collateralised crypto from the smart contract, they must first pay back the Dai they generated, along with a stability fee.

The MKR token can also be used to govern the Maker Protocol. Proposals to be voted on take the form of a smart contract and can be deployed by any Ethereum address. The MKR holders community can then vote on which proposal they would like to pass, and the Ethereum address that receives more approval votes in the form of MKR is granted administrative access to make the proposed change to the Maker Protocol.

MKR's security and transparency

MKR is a lending protocol based on the Ethereum blockchain network. It is a popular protocol in the Decentralized Finance (DeFi) industry, with users utilising the protocol to secure their assets. MKR is a secure and transparent protocol, with various features that enhance its security and transparency.

Security

MKR is one of the most secure protocols in the DeFi market. The protocol has invested in various online security measures, such as two-factor verification, to keep potential hackers at bay. The stability of the digital coin is also a testament to its security. MKR has had no issues for more than six months, which has helped increase users' confidence and, as a result, its value.

Transparency

MKR seeks to bring total transparency to the DeFi industry. Most stable coins lack transparency and require users to trust their reserves, leaving investors at the mercy of third-party auditors. MKR aims to change this by getting rid of centralised institutions. The MKR network can be traced on its blockchain, and the company also makes public every report and recording of the protocol's staff meetings for all participants to view. This level of transparency is a key factor in considering MKR as a potential investment.

MKR's compatibility with multiple wallets

MKR is an ERC-20 token, meaning it is compatible with any wallet that supports the ERC-20 token standard. This includes both hardware and software wallets.

Hardware Wallets

• Ledger Nano S: A popular cold wallet with a sleek and portable design. It supports over 5,500 digital assets, including MKR, and has a built-in OLED display for verifying transactions.
• Trezor Model T: An upgraded version of the Trezor Model One, featuring a touchscreen and robust security features. It supports over 9,000 digital assets and has a backup and recovery process that includes a 12-word seed phrase.

Software Wallets

• MetaMask: A free software wallet that works as a browser plug-in or mobile application. It supports MKR and other ERC-20 tokens, and offers a strong focus on user privacy and anonymity.
• Coinbase Wallet: A user-friendly wallet that supports thousands of coins, including MKR and all ERC-20 tokens built on the Ethereum blockchain. It offers Web3 functionality, allowing users to buy, trade, and earn rewards without leaving their assets in the custody of a centralised exchange.
• Trust Wallet: A non-custodial smartphone wallet that supports over 100 blockchains, including Ethereum, Solana, and Tether. It offers high-level security with a PIN, backup passphrase, and biometric authentication.

When choosing a wallet, it is important to consider factors such as security, ease of use, and asset support. Additionally, it is recommended to spread your assets across multiple wallets for added security.

MKR's high trading volume

The trading volume of a cryptocurrency is a good indicator of its viability as an investment option. MKR's trading volume is not as high as major cryptocurrencies such as Bitcoin and Ethereum, but it is relatively high, making it a good option to include in your portfolio. In the last 24 hours, MKR recorded an impressive trading volume of $55,404,944. This value indicates that despite its relatively high price per token, it is still highly liquid and a good investment option.

Liquidity is a measure of how quickly you can convert your assets into fiat currency or other crypto assets. MKR's high trading volume and liquidity make it a good option for day traders as they can quickly cash in on its volatility brought about by high demand. The higher the trading volume value, the more viable a coin is for investing.

In summary, MKR's high trading volume, liquidity, and availability on multiple exchanges make it a good investment option, especially for day traders. Its growing popularity in the DeFi space and unique features, such as lending on interest and stable demand and supply, further enhance its viability as an investment.

Maker's (MKR) deflationary system

The Maker Protocol has a deflationary system that helps maintain the value of their token over time. In this system, a part of the interest generated through lending and borrowing is burned every time a CDP smart contract closes. This procedure allows the system to maintain the supply and demand of the asset and, therefore, its value.

The Maker Protocol is different from other similar projects as they are prone to inflation as a result of their reward issuance policies. There is also no mining of coins in the Maker project. MKR is generated or burned only through DAI price fluctuations. The developers have created a unique system that utilises market mechanisms and incentives to ensure that DAI remains pegged to the value of the USD.

One DAI, in that case, remains fluctuating between $0.98 and about $1.03 based on market dynamics. Maintaining this value ensures that the price of MKR does not get affected severely by sudden changes in the market, making it a worthwhile investment.

The Maker Protocol employs a unique strategy to keep the supply and demand for their tokens balanced. The system has a deflationary mechanism, ensuring that a small interest fee is paid in MKR tokens when a collateralised debt smart contract is closed. A part of the fee is burned, ensuring that the protocol maintains a healthy balance between its existing supply and the demand for the cryptocurrency.

Protocols with deflationary mechanisms have become quite popular within the DeFi space. This ensures that the DeFi platforms are not devalued by inflation caused by reward token issuance policies. The issuers of the MKR token know that it is impossible to issue tokens continuously and maintain their value.

Frequently asked questions