#binance
MKR is the native governance token of the Maker Protocol, a key project in the decentralized finance (DeFi) space. It is also part of MakerDAO, which is the decentralized autonomous organization (DAO) that manages the protocol.
Here I break down its main functions:
* Governance: The main function of MKR is governance. MKR token holders have the right to vote on key decisions that affect the Maker Protocol and Dai (DAI), which is a decentralized stablecoin that seeks to maintain its value pegged to the US dollar. Each MKR token represents one vote. This allows the community of MKR holders to make decisions on aspects such as fees, acceptable collateral types, and system improvements.
* Maintaining Dai's stability: Although Dai is the stablecoin, MKR plays a crucial role in maintaining its stability. In situations where the system has a deficit (for example, if the value of the assets backing Dai falls too much), new MKR tokens can be minted and sold to cover that deficit, incentivizing MKR holders to govern responsibly to avoid these situations.
* Token burning: When stability fees (interest) are paid for Dai loans, they are paid in MKR. These MKR tokens are then burned (removed from circulation), which can reduce the total supply of MKR and potentially increase its value if demand remains.
In summary, MKR is an ERC-20 token (based on the Ethereum blockchain) that allows its holders to participate in decision-making within the Maker ecosystem, ensuring decentralization and the stability of the Maker Protocol and the Dai cryptocurrency.