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Choose your quick section of our MakerDAO review below.
A Quick Overview of our MakerDAO Review:
MakerDAO was started in 2014 by the Maker Foundation. In 2015 its global developing team started building the Maker ecosystem, and in 2017, the whitepaper introduced the Stablecoin System, or the Sai which was known as Dai.
MakerDAO Live Price
What is MakerDAO?
MakerDAO is one of the prominent long-standing decentralised finance (DeFi) finance players. It is an open-source project based on the Ethereum blockchain and is a decentralised autonomous organisation (DAO), created to bring an economic ecosystem which is powered by a currency that is stable and truly decentralised.
Key Features and Takeaways of MakerDAO
MakerDAO and its native token, MKR, are some of the most popular in the cryptocurrency space with the following distinct features and takeaways:
MakerDAO was started in 2014 by the Maker Foundation. In 2015 its global developing team started building the Maker ecosystem, and in 2017, the whitepaper introduced the Stablecoin System, or the Sai which was known as Dai.
The full name was Single-Collateral Dai, or SCD, as result of the system only accepting Ethereum (ETH) as collateral. By using ETH in this manner, participants could generate SCD through a complex system of smart contracts, however, in 2019, the Maker protocol was updated, and it is now powered by DAI.
MakerDAO forms part of a global community and it is used for lending of the stablecoin, DAI. This is done when users deposit supported ETH into the Maker Vault, generating a loan which is represented in DAI which can subsequently accrue interest.
MKR is the governance token in the system, and it represents the voting power of network participants. In addition, it also allows them to participate in decision making that affects the network.
Even though anyone is free to make proposals, only holders of MKR can vote.
MKR can also be used for recapitalisation of the protocol in addition to being sold on an auction if debt ever exceeds the surplus indicated. This ensures that the stable peg of DAI is maintained.
Another feature of MKR is that tokens can be transferred outside the MakerDAO system, meaning that voting rights can be purchased.
DAI is a stablecoin that is soft-pegged to the United States Dollar (USD) and this means that its price is typically equal to 1 USD. However, the value of DAI is not backed by the USD but by other currencies such as those that are locked in the Maker protocol as collateral.
MKR tokens can either be minted or burned to ensure that DAI’s capitalisation is kept stable. This process is automatically performed using smart contracts.
MakerDAO Mining
MKR is an ERC20 token which is built and issued by the Ethereum blockchain and cannot be mined. MKR tokens are created and destroyed based on the price fluctuations of DAI, ensuring that DAI can maintain its value proportional to that of the USD.
MKR is a governance and utility token of MakerDAO that serves the purpose of stabilising the value of DAI by using smart contracts, known as Collateralised Debt Positions (CDP). When the smart contract is executed, the MKR token subsequently no longer exists.
In addition to keeping the DAI stable against the dollar, MKR also provides users with control over the system in addition to ensuring a high level of transparency. By holding MKR, users can also vote on contributing to the development of the overall system.
When a CDP is ended, it destroys a set number of DAI which is equal to the sum that they generated using it. Users are required to pay a small interest fee in MKR, and this will lead to the MKR coin’s destruction, reducing the supply of MKR and increasing its price.
When the demand for DAI increases, users are incentivised to create more CDPs and subsequently close them so that they can gain back collateral. When DAI increases in popularity, more MKR will be burnt as interest fees which will inevitably increase the price of MKR.
Pros and Cons
| ✔️Pros | ❌Cons |
|---|---|
| MakerDAO solves the Tether problem that makes USDT a weak link for the overall crypto ecosystem | Malicious hack attacks against smart-contract infrastructures may occur |
| MakerDAO stablecoins are decentralised, with DAI created through user-generated collateralised debt positions | Black Swan events may happen involving one, or more, collateral assets |
| MakerDAO enforces the transparency for which the cryptocurrency ecosystem is widely known | |
| MakerDAO solves the problem that Bitcoin faces with manipulation in Tether creation pushing up the BTC price | |
| Stability is maintained through supply and demand for loans | |
| Anyone holding DAI can earn savings rate or DSR | |
| MakerDAO offers stability, flexibility, security, and it incorporates the use of smart contracts |
Transaction Fees
| Type of Fee | Information |
|---|---|
| Stability Fee | 7.5% |
| Trading Fees | From 0.0 MKR |
| Withdrawal Fees | From 0.0 MKR |
Should you buy MakerDAO?
Since inception, MakerDAO has seen ample support from its dedicated community. DAI is soft-pegged to the dollar and this will always be a positive for the crypto ecosystem regardless of whether it is a utility token, or not.
In the stabilising cycle associated with MakerDAO, DAI and MKR is involved and while DAI is responsible for the stability of the crypto aspect of the MakerDAO platform, MKR is the governance token that regulates all functions, volatility, and the availability of DAI.
MakerDAO and MKR is one of the best concepts that allows for DAI, the reliable stablecoin, to exist. Even though the future of both DAI and MKR is unsure, it is a strong product offering investors and users with ample rewards.
Another reason why investors are considering MKR is the deflationary environment that it creates by the earning of interest from CDPs who take loans in DAI. If there is ever a significant number of DAI outstanding, there is great potential for significant revenue.
How to buy MakerDAO (MKR)
Step 1 – Register an account with Gate.io
Navigate to the official Gate.io website and select the option to “Sign Up” from the homepage.
Complete the online registration form by providing country/region, a selected username, email address, and user-selected password. Read and accept the User Agreement and Privacy and select “Next”.
Create a fund password and select “Create Account”. Complete the “I am not a robot” reCAPTCHA. Check your email inbox for the activation email and click on the link in the email. If the link does not work, you can copy and paste the URL into your browser.
Log into your account using your credentials and complete the reCAPTCHA.
Check your email again for the verification email that contains the 6-digit code and click on “Confirm”. Enter the code that you received into the blocks provided and select “Log In” to proceed.
Before you can use the platform to purchase MakerDAO/MKR and other cryptocurrencies on Gate.io, you must complete the “Know Your Client” or KYC procedure to verify your identity and your proof of residence.
Click on “KYC Now” at the bottom of the webpage to start the process.
Select whether you are an individual or an organisation by selecting “Verify Now” under the relevant option.
Select your country from the dropdown list, enter your full name followed by confirmation thereof. Select your ID document type and provide your ID Number as shown on your official ID Document.
Click on the first image to upload a clear photo of the front of your ID document followed by a clear photo of the back of the document.
Next, write your Gate.io unique ID on a piece of paper and take a photo of yourself holding up your identity document (front) and the paper containing your unique ID.
Once you have done this, click on “Confirm and Submit”.
Next, you must enable the Timed One-Time Password (TOTP) to be able to log into your account. This can be done by clicking on “Set Now” at the bottom of the page.
On the new page that loads, select “Click here” to set up Two-factor Authentication.
Download Google Authenticator onto your mobile device by making use of any of the abovementioned methods.
Follow the steps indicated to add your Gate.io account by scanning the QR code or entering your unique key.
Enter the TOTP, your fund password, and the code sent to your email address and select “Enable Two-factor Authentication”. With this setup, you must use the Google Authenticator app to sign into your account every time.
Step 2 – Deposit funds
You must note that Gate.io is only a crypto-to-crypto exchange which means there is no fiat gateway. The only way through which funds can be added, is to transfer an existing crypto into your Gate.io wallet.
MKR can only be bought through Tether/USDT or Bitcoin/BTC while it can be traded with USD as a futures contract.
Navigate to the deposit/withdrawal section by hovering over your account and selecting the relevant option. Choose from the list of coins in which you can make a deposit and select “deposit” next to the appropriate coin.
You will be redirected to a page which generates a deposit address for the coin that you wish to deposit.
Copy this address, or scan the QR code, into the wallet where you are making a withdrawal from and depositing to Gate.io and wait for the relevant blockchain to confirm your transaction. Once the transaction has been completed and verified by the nodes on the chain, the coins will be sent to the Gate.io wallet and you can start trading MKR.
Step 3 – Explore your trading options
Gate.io offers a variety of ways through which cryptocurrencies can be obtained. Each of these can be explored individually depending on your trading needs and objectives.
To start trading MKR, select the option from the “Trade” Menu. Enter “MKR” into the search bar to see which trading options are available.
For spot trading, for instance and as an example, select MKR_USDT. Once you have selected, you will be directed to the exchange page which corresponds to the cryptocurrency pair MKR/USDT.
Here, you will see that you have the option to buy or sell MKR either as a limit order, grid trading, or as a time condition. The most common trading method is that of limit trading and thus it will be used for this guide.
Step 3 – Buy MKR through via Limit Order
To buy MKR and create a limit order for it, you can enter the amount of MKR you want to purchase, and the price you want to buy it at in USDT. This tool will tell you what the overall cost is in USDT, or any other chosen counter-currency, which will be deducted from your wallet once the order has been executed.
Step 4 – Sell MKR through via Limit Order
To sell MKR, find the panel under the chart and create a limit order for USDT according to your own preferences. Note that with a peg to USD, MKR that you exchange for USDT will hold the flat value that it has despite market conditions in the cryptocurrency market.
Step 5 – Withdraw funds
To withdraw funds, you will use the same page in Gate.io which was used to make a deposit.
Click on the deposit/withdrawal option on your Account dropdown and find the wallet of the currency that you wish to withdraw. You can do this easily by using the search bar provided.
Instead of a deposit address being generated, you will do this on the exchange, or the wallet being used as the destination for withdrawal of funds from Gate.io. Paste the address of the receiving wallet in the field provided and provide your Gate.io fund password, email code, and TOTP before selecting “Submit Request”.
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Frequently Asked Questions
When was MakerDAO first launched?
MakerDAO was created in 2014.
Who founded MakerDAO?
MakerDAO was founded by Rune Christensen.
What is “ICO”?
It is Initial Coin Offering that, unlike an IPO, does not mean that those who invest in the cryptocurrency will have an ownership stake of the company that they provide funds to.
When was MakerDAO’s ICO and how much did it raise?
There was no ICO conducted for MakerDAO to raise funds for the projects. Capital was acquired through a private sale of MKR coins.
Is MakerDAO legit?
Yes, MakerDAO, DAI, and MRK are legitimate.
What is MakerDAO’s total supply?
There is no indicted total supply of MKR.
What is the purpose of MakerDAO?
MakerDAO allows for the lending and borrowing of cryptocurrencies without the need of an agent. It is managed by a smart contract service that manages this service, with the value of loans regulated by DAI and MKR.
On which blockchain is MakerDAO based?
MakerDAO is based on the Ethereum blockchain.
Does MakerDAO work with smart contracts?
Yes, MakerDAO makes use of smart contract to offer borrowing and lending services.
Does MakerDAO have potential to become more valuable?
Yes, as result of the services offered and the unique structure surrounding MKR and DAI, it is set to become more valuable.
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