Maker Value And Coins In Circulation

The Maker value is influenced by plenty of traditional factors like projects news and developments, the sentiment on the market, and the flow of crypto on exchanges as well as the overall economy. But unlike most cryptos, Maker’s price is also affected by the market fluctuations that result in the minting and burning of the token and alter the total MKR supply and its value.

Maker’s value is derived from its utility as a Defi governance token and provides power to vote on how Dai is managed which drives the demand for the token and influences changes in the price on the market. Although MKR tokens don’t pay dividends, the value o the token is expected to increase in correlation with the DAI success.

MakerDAO launched with a supply of 1 million MRK tokens and there’s a circulating supply of around 902,000 MKR with a market cap of over 2.1 billion USD. The total supply of the tokens and their value depends on the market conditions and market prices. If the cryptos stored in a MAker vault smart contracts drop in price, they will n longer have enough value to collateralize the generated stablecoin which will lead to liquidation. In the case the DAI raised the auctions is not enough to cover the obligations, new coins will be minted. If on the other hand, more DAI than necessary is generated, it is used to buy back Maker tokens and burn them. With the total supply changing, it affects the prices but the Dai peg remains set at $1.

When Dai dips below the peg price, the entire system makes it more attractive for users to close their CDPs by repaying their debts because the rates get raised. This reduces the total DAI supply and the amount repaid gets destroyed. If the price exceeds the dollar value, the opposite will happen. The users get an incentive to open CDPs as interest rates get lower which will eventually create new DAI and increase the supply.