What’s Driving Maker (MKR)? High-Priced Coin Outshines Peers

Maker’s MKR token rose sharply on Monday, benefiting from an influx of trading capital into the cryptocurrency market following a prolonged period of stagnation. MKR is currently flirting with two-week highs, offering up signs that richly priced coins can still generate growth during the bear market.

MKR Price Update

The value of MKR jumped 6.7% to $663.75, its highest since Oct. 25, according to CoinMarketCap. Over the same 24-hour period, the total cryptocurrency market capitalization rose 2.1%.

MKR’s trade volumes have skyrocketed 232% over the past 24 hours, with daily turnover now exceeding $536,000. The primary market for MKR is OasisDEX, which processes roughly 80% of the daily volume.

At current prices, the MKR token has a total capitalization of $483.4 million, placing it in the no. 22 spot among active cryptocurrencies.

Although there was no immediate catalyst for the rally other than the broad uptick in market prices, ERC-20 tokens like MKR have increasingly decoupled from Ethereum. This was recently pointed out by data analytics provider Santiment, which argued that the “ETH decoupling pattern” was a precursor to the next bull market.

Maker Platform: An Introduction

Maker offers a unique value proposition for cryptocurrency traders looking to benefit from the marriage between blockchain technology and traditional finance, as well as those looking to capitalize on the growth of stablecoins. As a smart contract platform built on Ethereum, Maker balances the value of the Dai stablecoin using a system of collateralized debt obligations (CDPs), which hold users’ collateral assets. These collateral assets allow users to generate Dai stablecoins as well as accrued debt.

From the whitepaper:

“This debt effectively locks the deposited collateral assets inside the CDP until it is later covered by paying back an equivalent amount of Dai, at which point the owner can again withdraw their collateral. Active CDPs are always collateralized in excess, meaning that the value of the collateral is higher than the value of the debt.”

Dai and MKR both function within the Maker ecosystem, which is comprised of a stablecoin, collateral loans and decentralized governance. Whereas Dai is the primary token, MRK is considered a secondary token used to clear fees and serve other governance functions on the blockchain.

The Dai stablecoin is currently ranked 61st by market capitalization with a total circulating supply of roughly 68.44 million, according to CoinMarketCap. Dai is currently valued at $0.9943, having gained 1% compared with Sunday.

Controversy surrounding USDT, the market’s preferred stablecoin, has shined the spotlight on Dai and other stabilizing cryptocurrencies. However, Dai has been prone to heavy volatility in recent weeks, including two sharp declines that coincided with a large breakdown in USDT. This suggests that, while Dai’s price stability mechanisms may be different than other stablecoins, it is still prone to wider market sentiment. According to the whitepaper, Dai targets a 1:1 soft peg with the U.S. dollar.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi