Yerevan (CoinChapter.com) — MKR, one of the native tokens of the MakerDAO protocol, has turned ultra-bullish this week.
On Wednesday, the MKR/USD exchange rate crossed the $4,000 milestone. The token kept rallying during the Thursday session, claiming an all-time high of $4,970. Many analysts anticipated that the token would continue climbing to claim $5,000. It has not achieved the said level in its four-year lifetime as a cryptocurrency.
Overall, the MKR/USD rate has climbed by almost 45 percent since April 22.
In retrospect, MakerDAO was the first project that started what the world now calls a decentralized finance craze. It initially launched a peer-to-contract lending platform in 2017 that locked Ether in a smart contract to mint DAI, a dollar-pegged stablecoin. Later, in 2019, it introduced Basic Attention Token (BAT) as an additional collateral token.
Today it has many competitors, such as Tezos, Phantom Operations, Cardano, and others. The whole DeFi sector has grown to become a $60bn industry.
As reported by Coindesk, Maker recently announced that it would tokenize “real world” assets, such as residential properties, to integrate them into the DeFi sector.
That said, the project would accept real-world collateral (assets accepted as security for a loan) other than cryptocurrencies. The platform’s community voted on April 14 in favor of the proposal, enabling Maker to create an ERC-20 token that would represent an ownership stake in a pool of real estate asses as collateral.
Jack Purdy, an analyst at Messari, a cryptocurrency research firm in New York, commented on the Maker’s latest move to add real-world assets as collateral:
“[It] greatly increases the addressable market for collateralized loans. Such increases, in turn, should help to increase the supply of DAI, preventing the price from consistently exceeding the peg.”
DAI is the stable coin of Maker, which is pegged to 1 USD. The market cap of DAI is currently at $3.6 billion, now triple what it was in Jan 2021, according to CoinMarketCap.com. This rise signifies the expanding demand on the DeFi market.
On the other hand, MKR is a governance token for the Maker platform. It gives the holder the right to vote on modifying certain protocol rules and stake in its success. This way, if the collateral is not safe enough, the community will suffer the consequences. Personal incentive acts as a guarantee that the holders will act responsibly and vote accordingly.
That somewhat explains the explosive rise in the MKR market this week.
Ryan Watkins, senior research analyst at Messari, told CoinDesk:
“Many people have dismissed Maker because it moves slow and isn’t the most exciting project. But it is the most widely integrated protocol in DeFi, produces the most tried-and-trusted decentralized stablecoin and generates the most earnings for token holders in all of DeFi.”
It appears that incorporating real-world collateral onto the lending platform will bring even more trust and stability to Maker, propelling its MKR even further shortly.
Photo by Bill Jelen on Unsplash
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