In March, MKR traded at 2.5 ETH, meaning that it cost 2.5 ETH to purchase one of the tokens. But since that date, the cryptocurrency has been on a continuous decline against Ethereum, falling from the 2.5 ETH level to lows near 0.7 ETH just recently.
This comes in spite of immense growth in the market capitalization of DAI, MakerDAO’s native stablecoin and the cryptocurrency through which loans on the platform are issued.
Maker (MKR) sees strong performance
The rally in the cryptocurrency comes as the MakerDAO platform, which allows users to deposit crypto collateral to take loans in DAI, has continued to maintain its dominance as the most-used DeFi protocol by total value locked. There is $4.21 billion worth of cryptocurrency locked in the platform, up six percent today.
MakerDao still the TVL King and seriously pulling away from everyone else…..and as demand for leverage rises with risk appetite in 2021, its leadership will extend further.
— SpartanBlack (@SpartanBlack_1) January 6, 2021
Chris Burniske, a partner at Placeholder Capital, celebrated the rally, drawing attention to a tweet he made a number of months ago accentuating MakerDAO’s importance to the overall decentralized finance space.
How Maker works is that users deposit collateral, pay a fee on that collateral depending on what coin it is, then take out DAI as a loan.
The need for decentralized stablecoins
The rise in MKR’s price and the continued march higher of the DAI stablecoin supply comes as the need for decentralized stablecoins has grown.
While centralized stablecoins were recently validated by the U.S. Treasury in a number of announcements and clarifications regarding banks’ ability to use the technology, there are some that expect centralized stablecoins to fall under banking law soon.
House Democrats recently unveiled a bill that would put stablecoins under banking law.
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