MKR is the governance token for MakerDAO.
MKR token is used for
- Governance of the MakerDAO
- Recapitalization for the Maker lending vaults.
If the outstanding debt from Maker vaults exceeds a certain level the MKR supply may increase. And MKR will be sold in an auction to recapitalize the system. Makeing MKR holders not take excessive risk with protocol parameters.
What is MakerDAO
A protocol for:
- The DAI stablecoin
How MakerDAO works
Users can deposit collateral like ETH or other tokens to mint DAI.
DAI is a stablecoin pegged to $1.
- If the value of collateral in a vault goes below a threshold the collateral is sold for DAI to cover the outstanding DAI and stability fee.
- If not enough DAI is raised in the auction the protocol looks to the Maker buffer (generated by stability fees) to cover any remaining debt.
- If there’s still debt remaining then MKR is created by the protocol and sold for DAI to cover the debt.
Through governance MKR holders determine the different protocol parameters and ratios.
More on Vaults and MakerDAO here.
MKR token issuance
Total supply: 1,005,576 MKR