What Is Maker (MKR)?

Built using the Ethereum’s ERC-20 fungible token standard, Maker (MKR) is the native governance token of MakerDAO. MKR token holders use it to collectively manage the Maker Protocol and DAI stablecoin. Both MakerDAO and MKR were founded by Danish entrepreneur named Rune Christensen. In this article, we will delve into what is Maker and how its native token MKR is used to drive a decentralized, democratic governance system.

The token was launched in December 2017 alongside the launch of MakerDAO, a Decentralized Autonomous Organization and an open source project created on the Ethereum blockchain. Maker Protocol is an Ethereum-based decentralized application that works hand in hand with MakerDAO for issuance of DAI stablecoin. DAI is a crypto-collateralized and Ethereum-based ERC-20 token which is soft pegged to the US Dollar at a 1:1 ratio. 

With close to $8 billion total value locked, MakerDAO is one of the leading DeFi platforms at the time of writing. MakerDAO formed the Maker Foundation in 2018, which efficiently supports the platform and also created the Maker Protocol. 

The answer to what is Maker would be incomplete if we don’t delve into its true purpose. The primary aim of Maker token is to facilitate fair decentralized governance of MakerDAO and Maker Protocol, to manage financial risks associated with DAI, and to ensure its efficiency, transparency and stability. The holders of MKR token float governance proposals and vote on various changes and improvements to the Maker Protocol. The token is also actively used for rebalancing the Maker Protocol whenever it runs a deficit.

What Is MKR: Quick Highlights

  • MKR is the Native governance token of the Maker ecosystem
  • It features a fully decentralized governance system with active participation of MKR holders
  • Maker has a rapidly growing Maker ecosystem that comprises over 400 apps and services
  • Used for recapitalization of the system whenever required
  • Invested in by many well-known names including Andreessen Horowitz, Polychain Capital and Wyre Capital
  • It backs DAI, the fourth-largest stablecoin by market cap, as of writing

How Maker Works

Now that we know what is Maker, let’s dig a little deeper and understand how does Maker work? Maker ecosystem comprises two native tokens – DAI stablecoin and MKR governance token – both of which are based on Ethereum’s ERC-20 token standard. Hence, both also inherit the security features of the Ethereum blockchain. 

Anyone who holds the MKR token can vote on-chain, on proposed changes to the Maker Protocol, with each MKR token entitling the holder to 1 vote. However, such proposals can be floated by anyone and not just the MKR holders. The Maker governance process involves two steps – Proposal Polling and Executive Voting. While the former is conducted to reach community consensus, the latter is held to approve or disapprove the proposed changes to the system’s state. Some of the aspects that MKR holders can vote on include:

  • Adding new collaterals with their corresponding risk parameters
  • Change the DAI savings rate
  • Make alterations to risk parameters of existing collaterals
  • Choose emergency oracles
  • System upgrades
  • Triggering of emergency shutdowns

The MakerDAO governance mechanism in itself is flexible and can be even upgraded through similar governance proposals.

What Is Marker Ph

A part of MakerDAO governance happens off-chain too, for which no MKR tokens are needed. The off-chain voting is mainly used to gauge the sentiment of the community which is actively involved in debates and discussions surrounding the Maker Protocol. 

Apart from Maker governance, MKR token also plays the crucial role of recapitalizing the Maker Protocol, whenever deemed necessary. This occurs whenever the system debt becomes higher than the surplus, and involves conducting a Debt Auction in which MKR tokens are generated and sold for DAI, for making up the shortfall. Since issuance of new MKR tokens increases its circulating supply, it can negatively impact MKR’s market price. This risk makes MKR holders act responsibly while governing the Maker ecosystem. 

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On the other hand, whenever Maker Protocol’s surplus exceeds its debt, a Surplus Auction is conducted, in which MKR tokens are bought back from the market with DAI, and subsequently burnt, to reduce their circulating supply. This functions as a deflationary measure and keeps the overall MKR supply in check. 

The market value of the MKR token can drop and rise in accordance with growth and adoption of the DAI stablecoin.

Where Is Maker Used

Coming to what is Maker used for, it plays a significant role in the governance of the MakerDAO, Maker Protocol and DAI stablecoin. While MakerDAO doesn’t pay any dividends to the MKR token holders, it compensates them by providing them with a voting share in governing the organization which directly manages the DAI stablecoin. All on-chain voting is conducted through MakerDAO’s official Maker Governance Voting Portal, with MKR holders required to lock-up their tokens in a voting contract. 

These tokens are also actively used for recapitalizing the Maker Protocol to make sure that the DAI tokens circulating in the market remain fully collateralized by sufficient crypto assets, and that the stablecoin is able to consistently maintain its peg to the US Dollar. 

Maker Founders / History

Initially conceived and created by Rune Christensen in 2014, MakerDAO was fully launched in December 2017. He is a well-known entrepreneur from Sealand, Denmark who graduated with a degree in Biochemistry from the Copenhagen University, and also went to Copenhagen Business School to learn International Business. Prior to founding MakerDAO, Christensen had co-founded as well as managed an international recruiting company named Try China International.

Around 2015, MakerDAO project began its operations with developers from different parts of the world, who worked together on the first version of the project’s architecture, code and documentation. MakerDAO’s first formal white paper was published in December 2017, which introduced the SAI (Single-Collateral Dai) stablecoin that was generated with only one cryptocurrency, Ether (ETH), as a collateral. The SAI issuance was done using unique Ethereum-based smart contracts called Collateralized Debt Positions. The whitepaper also detailed how the stablecoin generation system would be upgraded over time, to support multiple crypto collaterals. This indeed became a reality in November 2019 with the launch of DAI (Multi-Collateral Dai), as detailed in the MakerDAO and Maker Protocol’s new whitepaper.

Maker Tokenomics

A total of 1,000,000 MKR tokens were pre-mined at the time of its launch in December 2017. While the majority of these tokens – 69.5% - were allocated to the MakerDAO’s founders and project, 15% went to the MakerDAO team. 

4% (40,000 MKR) of 1 million MKR were sold to investors through a private seed round on Dec 15, 2017, around the same time as the token launch. These were sold at a valuation of $300 per MKR token. Two more private seed rounds were conducted later in Sep 24, 2018 and Dec 19, 2018, which involved allocation of 6% (60,000 MKR) and 5.5% (55,000 MKR) tokens from the initial 1 million supply.

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Talking more about Maker supply, please note, there’s no hard cap on its maximum supply. This is because of how the Maker Protocol runs. New MKR tokens are generated whenever needed, thus increasing their circulating supply. On the other hand, MKR tokens are pulled from the market and burnt through a Surplus Auction, whenever there’s a system surplus. As of writing, MKR’s circulating supply is around 900,000 tokens while the maximum supply stands at nearly 1,005,000 tokens.

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How Is Maker Created?

As explained above, a total of 1 million MKR tokens were pre-mined at the time of its launch. However, as we learnt earlier while going over how does Maker work, more MKR tokens are minted and sold, whenever the need arises. 

New MKR tokens are created through a process called Debt Auction. It is employed to recapitalize the Maker Protocol system by auctioning off new MKR for a certain fixed amount of DAI. A Debt Auction is automatically triggered whenever the system’s DAI debt crosses a pre-specified debt limit decided by the Maker governance voters. It’s a type of reverse auction in which entities known as "Keepers" bid on how little MKR they would willingly accept, for a fixed DAI amount, payable at the time of auction settlement. The Debt Auction ends when the auction duration has been reached or the bid duration has passed. Once this auction is concluded, the successful bidders pay DAI tokens into the system, and receive freshly created MKR tokens in return. 

Maker Competition and How It Fares

Despite the well-known fact about Maker being the first noteworthy DeFi project of its kind to hit the market, there are other popular money market protocols like Aave and Compound that give it stiff competition. These protocols too offer attractive crypto loans to the users, often on better terms as compared to Maker Protocol. Even though minting DAI may seem like a better and cheaper option than borrowing the stablecoin, there are other user-related factors too, that come into play.

Secondary markets like Compound and Aave normally offer a wide range of crypto assets for borrowing and feature a higher Loan-to-Value ratio. This implies that you can borrow more DAI for every unit of the collateral, on other platforms, as compared to Maker. Although the difference may be negligible in some cases, it can add up to a lot if you’re borrowing large sums of funds.

Maker Over Collateralization

To give an example, while you need to deposit 170% of DAI’s worth in ETH, to mint 1 DAI through Maker Protocol, on Aave DAI can be borrowed with an LTV of around 75%, at a variable APY of 1.77%. 

Furthermore, MKR also faces stiff competition from other stablecoins that are created using a decentralized model, such as FRAX, MIM, LUSD and others. 

Maker Partnerships & Investors

MakerDAO held three private seed rounds in December 2017, September 2018 and December 2019. The first round had 40,000 MKR on offer at $300 per token. Some of the notable investors that came on board in this round include Polychain Capital, Andreessen Horowitz, 1Confirmation, FBG Capital, Walden Bridge Capital and Wyre Capital. The second round was held mainly for a16z Crypto, a venture capital fund that was allocated 60,000 MKR at $250 per token. In the third round, 55,000 MKR were sold to Dragonfly Capital and Paradigm.

MakerDAO has partnered with multiple well-known brands over the years, to further increase the adoption of its DAI token. Few of the well-known names that are a part of the Maker ecosystem include OKX, Oasis App, Wyre, imToken, Wirex, Ledger, Trezor, Anchorage, MetaMask, OpenSea, Althea, Oasis Borrow, League of Kingdoms, Blocklords, Sandbox, F1 Delta Time and Xaya.

Maker Strengths, Weaknesses, Opportunities, Threats


MakerDAO’s biggest strength lies in the fact that it’s one of the first few DeFi projects to get launched in the industry, and as of writing is ranked the highest amongst all DeFi platforms, based on TVL. With a market cap of nearly $7.5 billion (as of writing), its token DAI is one of the leading stablecoins at press time, and plays a crucial role in enabling Ethereum’s DeFi ecosystem. DAI also continues to be the first choice of a great multitude of traders who prefer using stablecoins that don’t involve any centralized entity or a trusted third party. Additionally, Maker Foundation has consistently lived up to its commitment of maintaining MakerDAO and DAI as fully decentralized. In Q2 of 2021, it returned 84,000 MKR from its development fund to MakerDAO’s governance module, without any conditions on their usage. This was another crucial step in Maker’s journey to accomplish full decentralization.

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Maker Aaaaaaa


Maker’s biggest weaknesses stem from the inefficiencies and vulnerabilities of its governance system. The stability of Maker’s DAI stablecoin depends largely on trusted oracles who provide pricing information. These in turn, are chosen through on-chain governance. As a result, there’s a danger of oracle feeds getting manipulated by the MKR holders, in an effort to steal system collaterals. 

Additionally, MakerDAO’s often-noticed unpreparedness for future uncertainties, which again is a case of governance failure, is another one of its major weaknesses. MakerDAO faced a major vulnerability of this kind on March 12, 2020, popularly known as "Black Swan" or "Black Thursday", when its biggest collateral ETH dropped significantly from around $200 on Mar 11, 2020 to $95 on Mar 12. As a result, Maker Protocol’s Collateralized Debt Positions started liquidating automatically, at a rapid pace. MakerDAO had to eventually mint and sell 21,000 MKR for a sum of $5.3 million, to recover the losses. The protocol is also prone to capital inefficiency and volatility because of its high dependence on over-collateralization and incentive mechanism for maintaining DAI stability.


Despite having solid fundamentals and a constantly expanding ecosystem, there’s a huge opportunity for Maker to plug the loopholes in its governance model. While it has been consistently doing that over a period of time, experts believe there’s more that can be done. In addition, the rapidly growing adoption of cryptocurrencies, including stablecoins, in various parts of the world, provides Maker an opportunity to further increase DAI’s market share. Hence, DAI may potentially be able to challenge the likes of BUSD, USDC and USDT too, in the times to come.


Maker, like all stablecoins and platforms that issue them, is vulnerable to constantly evolving government regulations regarding crypto assets. If regulatory bodies across the world ban the use of stablecoins, MakerDAO will find it extremely hard to continue its operations. It will be left with no option but to liquidate all its CDPs and return the collateral funds to their respective users. It’s another story whether it’ll be able to do that efficiently and successfully or not. Furthermore, if the US government passes a bill tomorrow to completely digitize USD and allow the digital version to be freely used in the online/offline marketplace, stablecoins like DAI will become redundant. 

Maker Roadmap

MakerDAO and Maker have come a long way from the time they were launched in December 2017. MakerDAO’s roadmap has been essentially about different upgrades to the Maker Protocol and various expansions brought about in the Maker’s ecosystem. 

It all began with the Single-Collateral Dai launch in December 2017, followed by major restructuring of the Maker Ecosystem Growth Foundation in April 2019. Thereafter, Multi-Collateral Dai was launched in November 2019. 

Soon afterwards, in December 2019, the Maker Foundation handed complete control over the MKR token contract to the project’s governance community. In an important upgrade, the protocol’s Governance Security Module delay was modified from 0 hour to 24 hours in February 2020, thus creating ample room to execute an Emergency Shutdown in case of an attack. 

Thereafter, with multiple improvements in the protocol, Rune Christensen announced full decentralization of MakerDAO in July, 2021. 

MakerDAO intends to maintain its position as top influencer in the global DeFi environment, and continues to work on bridges with Ethereum’s layer 2 solutions.

Maker Updates, News, Highlights

One of the biggest updates or news about Maker is to do with upgrading of MakerDAO’s native stablecoin from a Single Collateral DAI model to Multi Collateral DAI on Nov 18, 2019. It is only after this upgrade that Maker Protocol’s users could deposit multiple crypto assets as a collateral, for DAI issuance. It was a very crucial development that strengthened MakerDAO’s position in the global DeFi ecosystem and paved its way for becoming a force to reckon with in that space.

In another important MKR news, the MakerDAO announced in April 2022 that it will be deploying the Maker Protocol on an Ethereum Layer 2 zero-knowledge scaling solution called Starknet. The integration is expected to enhance DAI stablecoin’s multichain capabilities, by increasing its throughput and bringing down the transaction cost.

On MakerDAO’s Oracles

Oracles are entities that supply off-chain and on-chain data to smart contracts. The Maker Protocol employs such oracles to obtain price data for various crypto assets that are deposited into the system as collaterals. Armed with such information, the protocol can efficiently ascertain - when a Maker Vault (that contains the deposited crypto assets) must be liquidated, the maximum amount of DAI tokens that can be generated by any given Maker Vault, and much more.

MakerDAO’s oracles obtain this price data from multiple independent feeds that may comprise both organizations and individuals. 

Every oracle is associated with a single crypto asset and supplies its reference price. It consists of something known as an "Oracle Security Module" and a "Medianizer". The latter receives price data from multiple Feeds and Relayers. Each Feed employs a tool called "Setzer" that works out a median price from the asset prices obtained from a set of crypto exchanges. It then supplies this median price to the Relayers who then aggregate price data from different Feeds and send it to the Medianizer. 

What Is Maker Holders

Thereafter, the Medianizer finds the median of these multiple reported medians and publishes it as the reference price. At this point the "Oracle Security Module" comes into the picture and delays the adoption of reference price by the Maker system.

Please note, Feeds can configure the "Setzer" tool to pull the price data from the crypto exchanges of their choice. Furthermore, both "Oracle Security Module" and "Medianizer" can only be changed or configured by the MKR Governance.

Where To Buy Maker?

The ideal way to buy MKR tokens is from the OKX platform, by paying in a fiat currency of your choice and using a wide range of payment methods including credit/debit card, bank transfer, cash, e-wallets or through third party payment providers. Once you’ve logged into your OKX account, hover over the "Buy Crypto" header menu option, and use any of the available choices under it to make the MKR purchase. Alternatively, if you already hold some crypto asset on OKX, it can be easily converted into MKR on our "Convert" page, with zero fees and zero slippage.

How To Store Maker?

Your OKX wallet comes equipped with a wide range of security features to safely store your MKR tokens. What’s more, these tokens can then be used anytime you like, for trading purposes or using any natively available service/product on our platform. That said, MKR being an ERC-20 token, can also be stored on a number of well-known crypto wallets including MetaMask, MyEtherwallet, Trezor, Ledger and Atomic Wallet.


What Is the Best Way To Put My MKR Tokens To Use?

The ideal way to use your MKR tokens is employing them for governance of MakerDAO and Maker Protocol. You may even hold them in your wallet for the long-term, in wait for value appreciation.

How Was the Name "Maker" Coined?

According to Rune Christensen, the founder of the MakerDAO, the ‘Maker’ in MakerDAO and Maker is derived from the term "Market Maker".

What Is Maker Vault?

A Maker Vault is a tool that allows Maker Protocol’s users to deposit different crypto assets and generate DAI tokens in return.

What Is a DAO?

DAO is the short form of "Decentralized Autonomous Organization", which essentially is a group of individuals who come together to accomplish a common goal through interactions governed by smart contracts. In this case the common goal is to govern MakerDAO, Maker Protocol and DAI stablecoin.

How Is MKR Token Secured?

Being an Ethereum-based ERC-20 token, MKR is issued on the Ethereum blockchain and is secured by all of Ethereum’s inherent security features. 

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