Maker (MKR) ignores lows and jumps nearly 65% in a few hours; understand the bullish move
The cryptocurrency market remains down on Wednesday (11), with Bitcoin (BTC) struggling to stay above $30,000 and the Terra ecosystem’s (LUNA) stablecoin UST collapsing by failing to maintain its parity with the US dollar.
Meanwhile, the MKR token, which powers UST’s biggest competitor, DAI, stands out from the other cryptocurrencies by jumping double digits in the past 24 hours.
On Wednesday, the cryptoactive’s price jumped from $1,203 to a local high of $1,976. This is therefore a rise of almost 65% in just a few hours.
At the time of this writing, MKR’s price has retreated to $1,487. With this, in the last 24 hours, the appreciation is just over 20%.
In view of the overall bear market, the MKR token registers the highest daily appreciation among the top 100 crypto assets by market value.
MKR, which fuels UST’s competitor, soars
It is possible that the rivalry between UST and DAI has fueled the MKR token’s rise. Right now, the DAI stablecoin, which costs $0.9994 (about $1), ranks 15th in market value.
Meanwhile, TerraUSD (UST) has seen its price collapse to $0.3839 and pull away from the dollar price. Thus, stablecoin now ranks 18th in market value according to CoinMarketCap data.
As UST is facing serious problems, DAI is standing out as a safer stablecoin option. And with it, MKR is registering a higher valuation.
About the Maker — MKR — DAI Ecosystem
As mentioned, the Maker token powers the DAI ecosystem. More precisely, MKR is the governance token of MakerDAO and Maker Protocol — respectively a decentralized organization and a software platform, both based on the Ethereum blockchain. MakerDAO and Maker Protocol allows users to issue and manage the stablecoin DAI.
Users can lock a number of volatile assets, such as Bitcoin, Ethereum, or liquidity positions in other protocols, such as Curve, to coin DAI stablecoins. All DAI loans must be over-collateralized, with the index varying according to the asset deposited.
Launched preliminarily in 2015 and fully in December 2017, Maker is a project whose task is to operate the DAI stablecoin, which in turn is a community-managed decentralized cryptocurrency with a stable value pegged to the US dollar.
In practice, MKR tokens act as a kind of vote share for the organization that manages the DAI. While they do not pay dividends to their holders, they give the holders voting rights over the development of the Maker Protocol and are expected to appreciate in value in line with the success of the DAI itself.
Overall, the Maker ecosystem is one of the first projects in the decentralized finance (DeFi) landscape. Moreover, it is considered one of the most powerful projects in this sector. After all, it allows users to release liquidity while maintaining exposure to the assets backing the DAI loan.
Thus, if DAI continues to provide stability, UST investors may migrate to the competitor, boosting MKR.
