What Is Maker (MKR), And What Is Its Purpose


Have you ever wondered what Maker (MKR) is and why it holds significance in the world of cryptocurrencies? As stablecoins gain popularity in the crypto space, MakerDAO, the creator of Maker, has emerged as a key player in this area. Maker (MKR) is a governance token that supports the stability of MakerDAO’s DAI token and enables governance for the Dai Credit System. In this article, we will take a closer look at Maker and its role in maintaining stability in the cryptocurrency market. So, let’s delve into the world of Maker and explore its unique features and functions.

What is Maker (MKR)?


Maker (MKR) is a token created by MakerDAO with the purpose of supporting the stability of the DAI token and enabling governance for the Dai Credit System. The MKR token plays a crucial role in maintaining the value of DAI and ensuring the smooth operation of the MakerDAO ecosystem.


For those interested in learning more about Maker and the Dai Credit System, MakerDAO offers courses that provide a deep dive into the technology and concepts behind their platform. These courses cover topics such as collateralization, stablecoins, and the role of MKR in stabilizing DAI.

Deep Dives

If you’re looking for a more in-depth understanding of Maker and its impact on the decentralized finance (DeFi) space, MakerDAO provides deep dives that explore various aspects of their platform. These deep dives cover topics such as the role of MKR in maintaining DAI’s value, the use of collateralization, and a comparison to other stablecoins.


As a cryptocurrency, Maker (MKR) is listed on various exchanges and can be traded with other digital assets. The price of MKR may fluctuate based on market conditions and investor sentiment.


For visual learners, MakerDAO has a collection of informative videos that explain the key features and functionalities of the Maker platform. These videos cover topics such as the voting rights for MKR holders, the incentives for holding MKR, and the tradeability of MKR on exchanges.

What is Maker?

The Maker (MKR) token

Maker (MKR) is a token created by MakerDAO, a decentralized autonomous organization (DAO) on the Ethereum blockchain. The primary purpose of MKR is to support the stability of the DAI token and enable governance for the Dai Credit System. Holders of MKR have the power to make key decisions regarding the operation and future of the MakerDAO ecosystem.

Purpose of MKR

The main purpose of MKR is to stabilize the value of the DAI stablecoin. DAI is designed to provide stability in a volatile cryptocurrency market, and MKR plays a crucial role in achieving this stability. By creating and destroying MKR tokens in response to DAI price fluctuations, the value of DAI can be maintained at a dollar-equivalent value.

MakerDAO’s two tokens

MakerDAO has two tokens: MKR and DAI. While DAI is a stablecoin designed to provide stability and a new financial system, MKR is used to keep DAI stable. MKR acts as a counterweight to price fluctuations and helps to maintain the value of DAI.

Stablecoin market

The emergence of stablecoins in the cryptocurrency space has been driven by the need for less-volatile tokens that can be widely used. Traditional stablecoins use reserves of fiat currencies or physical assets to peg a cryptocurrency to their value. MakerDAO takes a different approach by using the MKR token as a mechanism to stabilize DAI and ensure its value remains pegged to the US dollar.

Use of MKR to stabilize DAI

MKR is created and destroyed in response to DAI price fluctuations. If the collateral system is not enough to cover the value of DAI, MKR is created and sold to the market to raise additional collateral. This mechanism helps to stabilize the value of DAI and maintain its dollar-equivalent value.

Methods of stabilizing DAI

MakerDAO uses a system of collateralization to stabilize DAI. When buyers purchase a collateralized debt position (CDP) using Ether (ETH), DAI is issued in return. The ETH acts as collateral for the loan, and when the loan is repaid, the DAI is “burned” or destroyed. MKR is used throughout this process and ensures that DAI remains stable.

What makes it so special?

Role of MKR in maintaining DAI’s value

One of the unique aspects of MakerDAO is the role that MKR plays in maintaining the value of DAI. By creating and destroying MKR tokens, the MakerDAO ecosystem can respond to price fluctuations and keep DAI stable. This mechanism ensures that DAI remains a reliable stablecoin in a volatile cryptocurrency market.

Use of collateralization

Collateralization is a key feature of the MakerDAO ecosystem and sets it apart from other stablecoins. By using collateral (in the form of ETH) to back the issuance of DAI, MakerDAO creates a more robust and secure system. This collateralization mechanism helps to provide stability to DAI and reduces the risk of volatility.

Comparison to other stablecoins

While there are many stablecoins in the market, MakerDAO’s approach to stability and governance sets it apart. The use of MKR tokens to stabilize DAI and the decentralized governance system gives users a higher degree of control and transparency compared to other stablecoin projects.

What can you do with Maker?

Voting rights for MKR holders

Holders of MKR have voting rights within the MakerDAO ecosystem. The continuous approval voting system allows MKR holders to vote on important decisions, such as the collateralization rate of CDPs. By participating in the governance process, MKR holders not only have a say in the future of the system but also earn MKR fees as a reward.

Incentives for MKR holders

MKR holders are incentivized to vote in a way that benefits the stability and growth of the MakerDAO ecosystem. If the system functions well and DAI remains stable, the value of MKR is maintained or even increases. This creates a symbiotic relationship between the ecosystem and the MKR token holders.

Tradeability of MKR

MKR is an ERC-20 token and can be stored in compatible wallets. It is also tradeable on various exchanges, allowing users to buy, sell, and trade MKR as they would with other cryptocurrencies. The tradeability of MKR adds to its liquidity and utility within the crypto market.

Who created MakerDAO?

Founding of MakerDAO

MakerDAO was founded in 2014 by developer and entrepreneur Rune Christensen. The organization was established in California with the vision of creating a reliable stablecoin (DAI) and a fair credit system for everyone. After three years of development, MakerDAO launched the DAI stablecoin, which marked a significant milestone for the project.

Management team

The core management and development team of MakerDAO consists of 20 individuals who work collectively to ensure the smooth operation and continued growth of the Maker platform. Their expertise and dedication to the project have been instrumental in establishing MakerDAO as a prominent player in the DeFi space.

Launch of DAI

In December 2017, MakerDAO launched the DAI stablecoin on the Ethereum mainnet. This marked an important step in achieving MakerDAO’s vision of creating a stablecoin that could provide stability and liquidity in the cryptocurrency market. Since its launch, DAI has gained recognition and popularity as a reliable stablecoin within the DeFi ecosystem.

A brief history

Key milestones in MakerDAO’s history

  • August 2015: The MKR token is launched, laying the foundation for the MakerDAO ecosystem.
  • December 2017: The DAI stablecoin is launched on the Ethereum mainnet, introducing a new stablecoin with unique features.
  • October 2018: DAI becomes the first cross-chain ERC-20 token on Wanchain, expanding its reach and interoperability.
  • September 2018: Kraken lists MakerDAO’s Dai, providing a major exchange platform for DAI trading.
  • October 2019: Ledn starts using MakerDAO to disburse loans to the unbanked, showcasing the real-world applications of DAI.
  • December 2019: The Maker Foundation transfers control of MKR to Maker Governance, emphasizing the decentralized nature of the ecosystem.

The future of MakerDAO

Credibility of MakerDAO’s stablecoin

MakerDAO’s efforts to create a stablecoin without traditional reserve backing have showcased its credibility in the DeFi space. The use of collateralization mechanisms and the role of MKR in stabilizing DAI provide confidence in the stability and reliability of the MakerDAO ecosystem.

Emergency process of global settlement

As a failsafe measure, MakerDAO has an emergency process called “global settlement.” This process involves a group of individuals holding settlement keys that can be used to trigger a settlement in case of system failure. This mechanism ensures that DAI holders can receive the equivalent value of their collateral, further enhancing the safety and trustworthiness of the platform.

Transparency and growth of MakerDAO

MakerDAO prioritizes transparency and fosters growth within its ecosystem. The regular sharing of meeting recordings online allows the community to stay informed about developments and decisions made within the MakerDAO governance framework. As MakerDAO continues to be at the forefront of the DeFi industry, its transparency and commitment to growth will be crucial in maintaining its position as a leading decentralized autonomous organization.