Most of the newly introduced cryptocurrencies are unable to maintain a stable position since they do not offer anything exceptional. Instead, they offer the same old protocols and routines which show that the developers behind it are trying to make money rather than come up with innovative idea that will change the future. In the midst of this money grab ideas, a few crypto coin innovators create something that is worth every penny. An idea that shapes the future of the crypto world as we know it.
Ever since the introduction of Bitcoin, the emergence of altcoins (alternate cryptocurrency) has been on the rise with every new coin trying to compete with the Bitcoin. However, most of them have not been able to make it to the top and they end up dead (zero market cap). That is why, you may get rather confused when you want to invest in the crypto world. In this article therefore, I will give you a brief description of the Maker (MKR) cryptocurrency, its history, founders and some of its great features.
History of Maker
Maker is a crypto platform defined as a smart contract that uses DAI coin to run its transactions. It provides a hedge to traders with a stable alternative compared to the other coins in the digital currency market. The platform offers a transparent coin system that can be inspected in the Ethereum platform. The crypto is led by Rune Christensen who is the CEO and founder of the DAI coin.
With the help of the MakerDAO team, the crypto was officially launched in December 2017. The coin is a stable coin that is suitable for savings, payments and collateral as well as providing its users with the options of closing and opening positions. The crypto coin DAI, is only found within the Maker blockchain where it is stable and cannot be interfered with some of the legality issues of the government systems or other trusted intermediaries. This helps the platform maintain its trading activities while still staying entirely in the cryptocurrency world.
The idea of a stable coin is quite easy to understand. A stable cryptocurrency is a coin that is pegged to a fiat currency. The crypto currency is just like any other cryptocoin out there (like bitcoin) but it is not as volatile as the rest. Ever heard of Tether? This is another stable coin and is present on the bitcoin platform using the Omni Layer protocols. Tether is however considered centralized as it can only be destroyed or created by the Tether limited company as well as it is audited by the bank reserves. Tether is additionally backed by the U.S dollars.
The stable coin theory helps to maintain a stable market position without the constant huge fluctuations. They also give the users a chance to exchange the coin with fiat currency without the need to undergo long procedures related to fiat trading. The MakerDAO team has 35 team members who work to develop a transparent coin that can be inspected. The coin can also operate as an asset-backed trustworthy crypto coin that is a viable option to other stable coins for example Bitshares and Tether.
Understanding MakerDAO Coin (DAI)
This coin works almost the same way as Tether currency works. Both stable coins are un-minable, pegged to the USD and also are collateral backed assets. However, the DAI coin is a little different compared to the Tether since it operates without any central control compared to Tether and is completely maintained by the market. The DAI coin also works in collaboration with the Maker token which is more valued in the digital market.
The Maker token is free to fluctuate because of its value which in turn helps the entire process of the DAI coin. The users are also able to create their own DAI coin with the use of the Ethereum. The Ether is first wrapped around a compliant token before being shifted into the Maker token and the user’s account is then credited with DAI coin. Additionally, users have the option of reversing the process in order to get Ether from a DAI coin whenever necessary.
The value of one DAI is equivalent to one USD hence the currency is maintained by the smart contract in its system. This makes it possible to respond to market dynamics which helps the currency to remain pegged to the USD. Moreover, this provides the users a stable coin regardless of the market state. On the other hand, the Maker token is able to freely move in value and price which corresponds to its increased use. The maker covers four major markets which includes; international trade, financial market, gambling markets and transparent accounting protocols which in turn benefit the use of the DAI coin.
This inter system collaboration of the Maker and DAI coin guarantees its users of a stable coin and limits its trader’s exposure to volatility. To top it all up, traders have the chance to develop their own coin using the autonomous system and the smart contracts in this platform. The platform also backs up every DAI with an asset that is secured via the smart contracts hence anyone can lock up their collateral using this system.
In conclusion, the Maker (MKR) platform has only lived for a few months which was after a number of tests carried out by the MakerDAO team. However, this coin has managed to make considerable steps forward for the stable coins considering the vast competition in the crypto world. This might actually be a step forward for the entire community of cryptocurrency since this coin provides the connection to the fiat coins.
Even with the strong critics arguing that this coin is centralized and backed to a fiat coin which is completely different from the essence of the cryptocurrency world, it still stands. More and more people are beginning to accept the fact that the crypto world won’t be able to move forward without some kind of anchor to the banking system. Though the future of this coin is quite unpredictable, we can only hope for the best.