June 7th, Lykke announces the listing of MKR, the native erc20 utility token of MakerDAO that functions as a governance token and recapitalization resource of the Maker system. MKR deposits, withdrawals and trading in pairs with BTC and ETH are now available for Lykke users.
Maker is a blockchain based platform that offers to its clients a variety of innovative financial products and services: a decentralized stablecoin, collateral loans, and community governance.
Maker was founded in 2015 with the fundamental idea of overcoming the main obstacle to cryptocurrency mass adoption: volatility. The platform aims to solve it by means of Dai, a decentralized stablecoin run on the Ethereum blockchain and pegged to the US Dollar. Dai eliminates volatility through an autonomous system of smart contracts, specifically designed to respond to market dynamics.
Since current regulation prevents Lykke from listing stablecoins like Dai, at the moment, we are only listing MKR on Lykke Exchange.
The MKR token is an essential element of the Dai system. It has three major functions:
- MKR is used to pay transaction fees in the Maker system. For example, these may be fees that arise as part of the Maker system of Collateralized Debt Positions (CDPs).
CDPs are analogous to loans in the traditional banking system however, they run on the Ethereum blockchain as smart contracts. Anyone can convert their Ether into Dai in order to take advantage of this mechanism. Loan issuing is subject to fees that have to be paid in MKR tokens.
- MKR comes with voting rights within Maker’s continuous approval voting system. If MKR holders are highly competent and govern the system well, CDPs will always remain overcollateralized and there will be no threat of insolvency to the system. However, mistakes or unforeseen circumstances can happen and, as a result, it is possible that parts of the collateral portfolio becomes undercollateralized.
- When the latter happens, the last function of the MKR token is triggered: automatic recapitalization through forced MKR dilution.
This means that the Maker system automatically creates new MKR tokens and sells them on the market, instantly raising money to recapitalize the shortfall of value in the system and bring it back from insolvency. This means that MKR holders are held directly accountable for their actions, since bad governance will result in their tokens becoming diluted.
This is how the Maker system is designed to maintain its stability in an unstable crypto market. Launched in 2017, the associated stablecoin Dai has successfully maintained a soft peg to the US Dollar. With a presence on numerous cryptocurrency exchanges, multiple partnerships with global supply chain companies, and agreements with organizations serving non-government agencies, Maker is unlocking the power of the blockchain to deliver on the promise of economic empowerment today.
Lykke is an innovative digital exchange based in the Swiss Crypto Valley and founded in 2015 by Richard Olsen, formerly of Oanda. Lykke is building a global marketplace on holistic principles of the free exchange of all assets. We offer a wide range of forex options, cryptocurrencies, digitized commodities and crypto index trading. In the future financial system, everything will have a digital representation and all agents of the economy will be able to exchange their assets seamlessly and by leveraging the power of such new technologies as blockchain. Lykke app is available for free download. More information on our website.