What is Maker (MKR)?

Quick Facts

  • Token: MKR — the governance token of MakerDAO
  • Blockchain: Launched on Ethereum in 2014, live in 2015
  • Core product: DAI, a decentralized stablecoin pegged to the US dollar
  • Mechanism: Users lock collateral in Vaults to mint DAI
  • Governance: MKR holders vote on risk parameters and protocol upgrades
  • Rebrand: MakerDAO rebranded to Sky in 2024; MKR remains a legacy token
  • Co-founder: Rune Christensen

Introduction

Maker (MKR) is the governance and utility token powering MakerDAO, one of the oldest and most influential protocols in decentralized finance. The protocol is best known for creating DAI, a decentralized stablecoin soft-pegged to the US dollar.

Unlike centralized stablecoins, DAI is backed by over-collateralized cryptocurrency assets held in smart contracts, giving it a trustless, permissionless character that has made it a cornerstone of the DeFi ecosystem.

History & Background

MakerDAO was conceived in 2014 and launched on the Ethereum blockchain in 2015, making it one of the pioneering DeFi applications. Its goal from the start was to build a permissionless credit system — letting anyone borrow against crypto without a bank or broker.

In 2024, MakerDAO rebranded to Sky, introducing a new governance token (SKY) and a new stablecoin (USDS). The existing DAI and MKR tokens remain in circulation as legacy assets, with users able to voluntarily migrate.

How Maker Works

Users deposit approved crypto assets into smart-contract Vaults as collateral. The protocol then mints DAI against that collateral at an over-collateralized ratio — meaning deposited value must exceed the DAI borrowed.

If a Vault's collateral falls below the required ratio, it is automatically liquidated through a collateral auction, protecting the system from bad debt. Key economic levers — including stability fees (borrowing interest) and the DAI Savings Rate — are adjusted by MKR governance to keep DAI's peg stable.

Tokenomics

MKR operates as both a governance token and a recapitalization backstop. Holders vote on critical parameters such as accepted collateral types, stability fees, and liquidation ratios.

In extreme scenarios where protocol debt exceeds collateral, new MKR can be minted and sold to cover the shortfall — directly aligning holders' incentives with the health of the system. Conversely, when the protocol generates surplus revenue, MKR is bought back and burned, creating a deflationary pressure.

Circulating supply ? 90,264 MKR
Reserved supply ? 0.01 MKR
undistributed
0x8ee7d9235e01e6b42345120b5d270bdb763624c7
0.01 MKR
Total supply ? 90,314 MKR
Max supply ? 1.01 million MKR
Updated 6d ago

Ecosystem & Use Cases

DAI, the stablecoin governed by MKR holders, has become a foundational asset across DeFi. It is widely used in lending platforms like Aave and Compound, in decentralized exchanges for liquidity provision, and in yield farming strategies.

MKR itself is primarily used for on-chain governance voting, giving holders direct influence over one of DeFi's most critical protocols. Governance uses Maker Improvement Proposals (MIPs) and delegated voting to manage protocol workstreams.

Team, Governance & Community

MakerDAO was co-founded by Rune Christensen and initially supported by the non-profit Maker Foundation, which gradually handed control over to the DAO. Today, governance is entirely community-driven.

MKR holders and their delegates vote on proposals that shape everything from collateral policy to protocol budgets. The community is organized into Core Units — specialized teams managing distinct protocol workstreams.

Advantages

  • Decentralized stablecoin: DAI is permissionless and censorship-resistant, backed by crypto collateral rather than a central issuer.
  • Battle-tested protocol: MakerDAO has operated through multiple market cycles since 2015, demonstrating resilience.
  • Deep DeFi integration: DAI is embedded across hundreds of DeFi protocols, giving MKR governance broad systemic importance.
  • Community-driven: All major decisions are made by MKR holders, aligning the protocol with its stakeholders.

Risks & Challenges

  • Collateral risk: A sharp market crash can trigger mass liquidations, potentially destabilizing the DAI peg.
  • Governance risk: Low voter participation or concentrated MKR holdings can undermine decentralized decision-making.
  • Transition uncertainty: The rebrand to Sky and the migration from MKR to SKY have seen limited adoption, creating uncertainty around MKR's long-term role.
  • Smart contract risk: As with all DeFi protocols, bugs or exploits in smart contracts could put collateral at risk.

Long-Term Vision

MakerDAO's 'Endgame' plan aims to evolve the protocol into a network of semi-autonomous SubDAOs (called Stars), each with its own governance token and product focus, all tied to the broader Sky ecosystem through shared reserves and USDS integration.

The ultimate goal is to render core governance mechanisms immutable — reducing the attack surface and enabling the protocol to grow in a truly decentralized, sustainable manner. MKR's role in this future depends on community governance decisions and the ongoing migration dynamics.

Frequently Asked Questions

MKR is the governance token of MakerDAO, allowing holders to vote on key protocol parameters such as stability fees, accepted collateral types, and system upgrades. It also serves as a recapitalization backstop in extreme market events.

DAI maintains its US dollar peg through over-collateralized Vaults, stability fees that influence borrowing demand, the DAI Savings Rate, and automated liquidation auctions. MKR governance adjusts these parameters in response to market conditions.

In 2024, MakerDAO rebranded to Sky and introduced a new governance token (SKY) and stablecoin (USDS). MKR holders can voluntarily convert to SKY at a 1-to-24,000 ratio, while MKR and DAI remain in circulation as legacy tokens.

In a protocol emergency, new MKR can be minted and sold to cover bad debt, diluting existing holders. Additionally, MKR holders bear governance risk if decisions are made with low participation or by a concentrated group of large holders.

MKR holders vote on Maker Improvement Proposals (MIPs) using their tokens, with voting weight proportional to holdings. Holders can also delegate their votes to representatives who participate in protocol governance on their behalf.

MKR was originally launched on Ethereum, where its primary contract resides. It is also accessible on Polygon and BNB Smart Chain through bridged token contracts.

Endgame is MakerDAO's long-term restructuring initiative, aiming to evolve the protocol into a network of semi-autonomous SubDAOs called Stars. Each Star has its own governance token and product focus while remaining connected to the core Sky Protocol.

DAI is a decentralized stablecoin pegged to the US dollar and used for payments, savings, and DeFi activities. MKR is the governance token that gives holders voting power over the Maker protocol, which issues and manages DAI.