MKR is the governance token of the MakerDAO and Maker Protocol, which are responsible for issuing and managing the DAI stablecoin.
Here’s what MKR does:
Governance Rights: MKR holders can vote on key decisions about the Maker Protocol, such as:
Risk parameters for collateral types (like ETH, wBTC)
Stability fees (interest rates for borrowing DAI)
Adding or removing collateral types
Upgrades or changes to the system
No Fixed Supply: MKR supply can change—new MKR can be minted or burned depending on the system’s needs, such as covering bad debt.
Backstop for DAI: In extreme cases where collateral isn't enough to maintain DAI’s peg, MKR can be diluted (minted and sold) to cover the shortfall. This incentivizes MKR holders to vote responsibly.
