298 Interactions, 4 today
The Maker price has reached a new all-time high as the MakerDAO group prepares to become completely decentralised.
Stablecoins have been an important cornerstone piece for the cryptocurrency market because they act as a highly liquid base pair for most investments while also providing investors with a safe place to collect profits. Data also reveals that stablecoins play an important role in acting as a conduit for capital inflows into the crypto ecosystem.
Although the market’s largest stablecoins are currently regulated and distributed by centralised organisations such as Tether or Circle, DAI and its issuer Maker (MKR) is one stablecoin project that adheres to the cryptocurrency community’s ethos of decentralisation.
Data from TradingView shows that the price of MKR has nearly tripled in the last week, rising from a low of $2,011 on April 7 to a new all-time high of $4,096 on April 15 due to improved trading activity.
MKR has gained traction in recent weeks as the ecosystem has focused on making the protocol completely decentralised and community governed.
Governance has arisen as a desired attribute in the 2021 bull market as part of the larger decentralised finance (DeFi) trend, and MakerDAO offers one of the most involved governance interactions in the crypto field.
As the community prepares for complete decentralization, these are the key components for creating a self-sustaining MakerDAO:https://t.co/BgrvGUvci2
— Maker (@MakerDAO) April 3, 2020
Holding MKR is expected to engage in protocol governance, and the growing number of governance initiatives to vote on has increased demand for MKR, driving its price higher.
Demand for DAI boosts Maker price
As previously said, one of MakerDAO’s key responsibilities is to manage the DAI stablecoin, which has seen substantial growth in its overall supply in 2021 as the algorithmically regulated stablecoin has become stronger at retaining its peg to the US dollar.
DAI’s supply has grown in part due to its use as the go-to solution for a decentralised stablecoin through a variety of DeFi protocols, including AAVE, Compound (COMP), and Cream Finance (CREAM).
New DAI are produced by depositing collateral such as Ethereum (ETH) or ChainLink (LINK) in a MakerDAO vault and generating DAI against it.
As a result of this process, the increasing availability of DAI has combined with an increase in the overall supply.
The Maker protocol has worth locked (TVL), making it the second-ranked DeFi protocol after Compound, which has a $9.28 billion TV.
As the TVL on MakerDAO gradually increased in tandem with the increasing availability of DAI, fundamental measures such as rises in social media activity started to signal an impending price move.
With altcoins on the rise once more and the DeFi market heating up, as demonstrated by rising TVL across the ecosystem, MakerDAO could rise even more as the go-to option for investors seeking to engage with Ethereum network-based DeFi protocols.