MakerDAO is the governance community behind the Maker Protocol, which develops and maintains the DAI stablecoin. As a decentralized autonomous organization (DAO), MakerDAO enables global MKR token holders to govern the protocol and steer its development through community-driven directives.
Key Essentials
- MakerDAO: A DAO where MKR token holders govern the Maker Protocol and ensure the stability of DAI.
- Maker Protocol: A suite of Ethereum-based smart contracts that manage the multi-collateralized DAI stablecoin.
- MKR Token: Used for voting on protocol changes and stabilizing DAI’s peg via dynamic supply mechanisms.
How MakerDAO Works
Maker Protocol Mechanics
Users generate DAI by depositing crypto (e.g., ETH, BAT) into Maker Vaults—overcollateralized smart contracts that lock assets exceeding the borrowed DAI value. Key features:
- Stability Fee: A small interest charged on loans.
- Keepers: Arbitrageurs who balance DAI’s peg by buying/selling during price deviations.
Auctions:
- Surplus Auctions: Excess DAI is auctioned for MKR, which is burned.
- Collateral Auctions: Liquidate undercollateralized vaults.
- Debt Auctions: Mint new MKR to cover unpaid debts.
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Governance with MKR
MKR holders vote via:
- Governance Polls: Weekly sentiment checks.
- Executive Votes: Binding protocol changes (e.g., collateral types, fee adjustments).
Development of MakerDAO
Founded in 2014 by Rune Christensen, MakerDAO launched its single-collateral DAI (originally Sai) in 2017. Key milestones:
- 2019: Shifted to multi-collateral DAI.
- Funding: Backed by Andreessen Horowitz ($15M for 6% of MKR supply) and Polychain Capital.
MKR Token Utility
- Governance: Voting on protocol upgrades.
- Stability: Balances DAI’s supply via auctions.
- Tokenomics: Initial supply of 1M MKR; supply adjusts via burns/mints.
FAQs
1. What backs DAI’s stability?
DAI is overcollateralized by crypto in Maker Vaults, with arbitrage and auctions ensuring its $1 peg.
2. How does MKR differ from DAI?
MKR is a governance token; DAI is a stablecoin. MKR’s value derives from protocol utility, while DAI aims for price stability.
3. Can anyone join MakerDAO?
Yes—by holding MKR tokens, users gain voting rights.
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Disclaimer: Cryptoassets are volatile and unregulated. Always conduct independent research.
### **SEO Notes**
- **Keywords**: MakerDAO, MKR token, DAI stablecoin, decentralized finance, Ethereum smart contracts.