MKR

MKR is the governance and utility token of the MakerDAO decentralized lending platform on the Ethereum blockchain. It is an ERC-20 token used to govern the Maker Protocol and participate in risk management as the system issues the stablecoin DAI, backed by collateral held in Vaults (formerly called CDPs). DAI aims to maintain a soft peg to the U.S. dollar, with its stability supported by on-chain collateral and governance-driven parameters.

Holders of MKR participate in on-chain governance by voting on proposals that determine which assets can be used as collateral, changes to risk parameters, debt ceilings, and other aspects of system design. Governance decisions are formalized through Maker Improvement Proposals (MIPs) and are executed in a transparent, decentralized manner, allowing MKR owners to influence the evolution of the protocol.

Token economics are dynamic rather than fixed. In the event the system accumulates bad debt due to collateral price declines, new MKR can be minted and sold to raise funds to cover the shortfall, thereby acting as a capital backstop. This mechanism can dilute existing MKR holders, linking the token’s value to the system’s health. Outside of such events, governance-driven updates to parameters shape the balance between risk and stability.

History and context: MakerDAO was founded to create a decentralized credit system, with MKR serving as its governance token. The platform introduced Multi-Collateral DAI (MCD) in 2019, expanding eligible collateral beyond ETH to multiple assets. MKR is traded on major cryptocurrency exchanges and remains central to decisions about the Maker Protocol and the stability of DAI.