What is Maker?
Maker is a cryptocurrency that complements a stablecoin called DAI. Maker tokens help DAI remain stable and they also enable some voting rights for its stablecoin platform.
What problem does it solve?
Without a 1:1 dollar backed reserve, it is hard to create a stable cryptocurrency. Even with cryptocurrencies that have dollar backed reserves, we have still seen currencies that are supposed to be pegged to the dollar lose their 1:1 value. Maker helps enable a stablecoin called DAI remain stable.
How does it solve it?
In order to redeem DAI for its initial collateral, one needs to burn a small amount of Maker tokens. Additionally, if the collateral used to support the DAI’s price loses the majority of its value, then Maker tokens can be used to prop up the price of DAI to ensure that it stays at a $1.00 valuation.
Why does it need to be a token?
Maker provides an additional layer of collateral for DAI to remain priced at $1.00. It also enables a decentralized governing force to make decisions for the DAI network.
Stablecoins have been one of the hottest topics in 2018 and DAI is the most popular non dollar backed stablecoin. As existing and emerging dapps wish to remain completely decentralized, they will want to used a decentralized stablecoin and not one that depends on a single third party like Tether, the Coinbase Dollar (USDC) or the Gemini Dollar. BlockWolf sees more demand to come for DAI, which means that Maker should be a good coin to hold on to.
Much of Maker’s demand/price depends on DAI and stablecoins in general. It seems like stablecoins are going to be popular moving forward so as long as nobody creates a better version of a decentralized stablecoin, Maker should continue to persist in the market.