In the current bear market, there is one cryptocurrency that is defying the odds which is 17th largest cryptocurrency by the market cap of $507 billion, according to the data provided by Coinmarketcap. MakerDAO promises the “stability for the blockchain,” while featuring a stable coin called Dai (DAI) and its native cryptocurrency known as Maker (MKR).
48% Surge in Price
In the month of February, MKR saw about continuous growth until February 14th. Starting the month at $362, the price of Maker went up to $536, seeing a surge of 48 percent. However, now it is just above $500 with 24-hrs loss of 3.66 percent. At the time of writing, MKR has been trading in the red in the BTC and ETH market as well by 3.57 and 3.59 percent respectively.
MKR price 1-month chart, Source: Messari.io
Maker has been one of the hottest coins in 2019 which is up about 5 percent from December. While, in the month of February, the price rose almost every single day.
CDP Creation saw 300% Growth in last 4-Months
To put it simply, Maker is a blockchain network based on Ethereum that operates a stablecoin and a collateral loan system. As a stablecoin, Dai is pegged to the US dollar that offers stabilization along with transparency and decentralization, since it is built on top of the Ethereum network.
Dai maintains its 1:1 ratio stability through an automatic mechanism called TRFM where,
“The Target Price of 1 Dai is $1 USD, so the Target Rate determines the needed change of price of Dai over time in order to reach the Target Price during a market swing. However, when the TRFM engages, the fixed peg ratio of 1 DAI to $1 USD breaks, but it is required in order the get the price of Dai back to where it needs to be,”
explained Sharon Manrique of MyCryto.com.
For its loan system, by using Dai, users put up cryptocurrencies that is Ethereum as collateral to borrow capital. For instance, if you deposit 2 ETH into a CDP (Collateralized Debt Position) and borrow 100 Dai then in order to get your full 2 ETh back you would have to pay back the 100 Dai plus accumulated interest.
Recently, MakerDao boasted of its highest rate of CDP creation as total Dai debt has reached, $78,311,051.91 while total ETH in collateral is now $2,052,108.53.
As we reported before, the highest Collateralized Debt Positions has been created in January 2019 at 1867, while till now in February it is at 478 a bit lower than September’s but higher than October numbers.
Since October, the platform has been experiencing exponential growth as in the last four months, the figure has grown about 300 percent.
Exponential Growth of Dai Usage
The native cryptocurrency of the Maker blockchain network gives its investors the ability to participate in important decision making. As can be seen in the above graph the Dai usage has increased over time and this surge in user activity along with an increase in adoption directly affects the Maker price.