What is Maker coin?
Maker (MKR) is a smart contract platform built on the Ethereum blockchain that aims to solve the crypto market's volatility issues. It serves as the foundation for a next-generation blockchain-based banking system that enables faster and simpler international payments as well as peer-to-peer transactions. The goal of this project is to back and stabilise DAI Stablecoin, a collateral-backed cryptocurrency. DAI is essentially digital currency with purchasing power because its value is pegged to the US dollar. Maker is able to accomplish this through the use of its proprietary smart contracts known as Collateralized Debt Positions.
Anyone can use the platform to generate DAI by leveraging their Ethereum assets. Users can freely send this collateral-backed cryptocurrency to others and use DAI once they have it.
Understanding Maker’s unique dual system
First and foremost, let us provide some context for why Maker Dai coin is gaining traction.
The crypto market is notoriously volatile, which is the primary reason why cryptocurrencies have yet to become a mainstream payment method. Who wants to spend 5,000 crypto tokens on a pizza only to find out they're worth a fortune two weeks later? Having a stable cryptocurrency on the market that is not affected by market conditions or influenced by profit-seeking individuals could significantly increase the rate of trading and help cryptos finally break into the mainstream. Here comes the Maker Dai Stablecoin.
To get a complete picture of how the platform works, we must first examine its dual coin system. Maker's platform
The DAI was established to protect MKR from extreme market volatility and price fluctuations. Its value is fixed to the US dollar, so 1 DAI equals 1 USD. DAI, as a decentralised stablecoin, lends itself particularly well to four key markets: finance, gambling, transparent accounting, and international trade.
What’s the use of the Makercoin MKR?
MKR, unlike DAI, is not a stablecoin and thus has a volatile price. The coin is essential to the platform's ecosystem and supply mechanics. It serves three functions on the platform: utility token, governance token, and recapitalization resource. MKR is used to pay the various fees associated with DAI generation. MKR is burned every time fees are paid, removing it from the chain. The supply of MKR is proportional to the demand for DAI.
Holders of MKR also have the ability to vote on the Maker system's risk management and business logic.
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