Maker prices are up by nearly 14%. At press time, the coin is trading at $673.19 and has recorded a volume of $73,74,514 in the past 24 hours. The reasons for the price rise could be attributed to its native token DAI hitting $100 million debt ceiling.
Protocol Upgrade Effect in Play
Maker (MKR) is used to govern the Maker platform, and has a volatile price which is determined by market supply and demand. Whereas, DAI is a stablecoin, with its value tied to the U.S. dollar, and it is suitable for making payments or as a collateral or savings instrument. Both are native tokens of Maker DAO, an Ethereum based decentralized lending protocol behind DAI, a stablecoin that is pegged 1:1 against the USD. Unlike, True USD and Tether(USDT), the stablecoin is backed by Ether(ETH). In order to automate the lending of DAI, MakerDAO leverages Ethereum smart contracts. Presently, there are 1,716,042 ETH, or 1.58 percent of the total supply, locked in the DAI smart contracts.
To keep prices stable, MakerDAO usually issue out new DAI tokens while simultaneously increasing stability fee. The sudden price surge in MKR token can be attributed to DAI stablecoin hitting its 100 million token debt ceiling. This implies that currently 100 million DAI tokens have issued in loans and no more DAI can be issued until the debt limit is raised higher. However, plans to do the same are already underway. Per a tweet by Maker on its official Twitter handle, the Maker Foundation Interim Risk Team has placed an Executive Vote proposal into the voting system to lowering the DAI Stability Fee and increasing the debt limit to $120 MM.
The Maker Foundation Interim Risk Team has placed an Executive Vote proposal into the voting system to lower the #Dai Stability Fee to 5% AND raise the debt ceiling to 120 million. The Executive Vote is now live at https://t.co/g9vSgxm089
— Maker (@MakerDAO) November 7, 2019
Interestingly, total value locked in Maker just hit a 90-day high yesterday.
On Oct. 9, Rune Christensen, the CEO of the Maker Foundation announced that they would release a multi-collateral DAI (MCD). It is slated for release on the 18th of November. Subsequently, DAI stablecoin will undergo a collateral protocol upgrade. This will allow users to stake multiple assets as collateral. Furthermore, CDPs for different assets will be known as vaults. This implies that cryptos will be stored in different vaults. Initially, the system will support only the Basic Attention Token (BAT).
Maker DAO Reduces Stability Fee
Furthermore, on the 28th of October, the stability fee was reduced from to 5.5 percent by one large MKR whale who had placed a single vote pushing the number of submitted votes from 2,489 to 44,539 votes. Previously, in order to keep up with market forces and the continuous readjustments by MakerDAO’s protocol, the stability fee had risen up to 19.5%. This, in turn, sparked outrage from borrowers and holders of Maker (MKR) tokens.
Will MKR token manage to keep up with the price rise? Let us know, what you think in the comments below!