Maker is a permissionless, multi-asset, overcollateralized smart contract lending platform based on the Ethereum blockchain. It allows users to take out decentralized loans by locking-in collateral in exchange for $DAI, an algorithmic stablecoin.
Borrowing & Lending
$DAI Borrowing: Users can borrow $DAI by overcollateralizing digital assets. They pay a stability fee for borrowing and receive back collateral when repaying their debt. A liquidation auction may occur if the collateral value drops below the liquidation price. Yield: $DAI can also be locked to generate yield (DSR) $MKR Voting: $MKR holders own voting rights on the Maker Protocol. Minting/Burning: If a debt auction occurs (loan>collateral), $MKR is minted. Else $MKR is burnt in the case of surplus auction (loan<collateral).
Governance: $MKR token holders are incentivized to buy and hold the token due to its governance rights, giving them the power to vote on key decisions that affect the Maker protocol's direction. Token value accrual: Keepers are another key player in driving demand for $MKR tokens. In a surplus auction, keepers compete in an increasing bid auction to receive a fixed quantity of $DAI, incentivizing them to acquire $MKR. In a debt auction, keepers try to acquire $MKR at a discounted price to quickly cover the protocol's debt, further driving demand for the token due to the mapping of value.
The value created by Maker lies in its decentralized lending platform on Ethereum, offering users permissionless, multi-asset loans through smart contracts. Maker's over-collateralization ensures secured loans and reduced default risks. Its stablecoin, $DAI, provides a stable store of value. Users can access credit transparently and securely, bypassing traditional financial institutions.
Value accrual to token: $MKR holders benefit from governance rights, allowing them to manage the protocol's treasury, stability fees, DSR, PSM, collateral liquidation price, and asset collateralization ratio. In addition, if the protocol makes sound lending decisions, $DAI received from borrowers can be converted into $MKR and burnt, generating profits that accrue to $MKR holders. Value accrual to protocol: The Maker Protocol earns income from stability fees charged on $DAI loans and collects liquidation penalties. These revenues are used to fund protocol expenses and back the $DAI stablecoin. Any excess income is added to the protocol's treasury, which can be used to support future growth
The business model for Maker Protocol: Revenue comes from: Interest revenues (Stability Fees) from loans, liquidation penalties from liquidated vaults, stablecoin trading fees from the Peg Stability Module (PSM) Revenue is denominated in: DAI stablecoin, MKR governance token Revenue goes to: MKR token holders (surplus auction), Protocol Treasury (debt auction), and MKR burn (excess revenue) with varying percentages determined by governance votes.
|Problems & Solutions|
Problem: Traditional lending platforms require extensive paperwork and credit checks, making loan access difficult. Centralized systems carry risks of corruption and failure, causing losses for lenders and borrowers. Solution: Maker's decentralized lending platform eliminates the need for credit checks or paperwork, reducing barriers to loan access. Overcollateralization and $DAI stablecoin reduces default risks, while permissionless access and Ethereum blockchain promote transparency and security.
Compound Finance - a decentralized lending platform that allows users to lend and borrow a variety of cryptocurrencies. Aave - a decentralized liquidity protocol that allows users to earn interest on deposits and borrow assets on a peer-to-peer basis. Synthetix - a decentralized platform that enables the creation of synthetic assets that track the value of real-world assets, allowing users to gain exposure to a variety of assets without actually holding them.
... coming soon
Token Generation Event and Single Collateral Dai (SCD) launch
MCD transition & DSR
Multi Collateral Dai (MCD) transition and introduction of the Dai Savings Rate (DSR)
Transfer of $MKR token control from the Maker Foundation to the Maker governance community
RWA: US treasury & corporate bonds
Maker invests 500M worth of $DAI into US treasury and corporate bonds
RWA: HVB loan
Maker approves a credit line of 100M $DAI to Huntingdon Valley Bank: the first integration between a decentralized finance protocol and a traditional bank