Maker DeFi Token Jumps 30% as Users Turn to DAI Stablecoin Amid Terra’s Collapse – Decrypt

While crypto markets staged a rebound Friday dawn, the MakerDAO administration token, MKR, was up 30 % as investors bet on its DAI stablecoin amid Terra ‘s ongoing crash .
early Friday, MKR was the eighth-largest DeFi ( decentralized finance ) token with a market cap of $ 1.4 billion, according to CoinMarketCap. meanwhile, DAI had become the fourth-largest stablecoin with a market crown of $ 6.47 billion .
The tide in matter to was enough to make MKR the second-largest DeFi token, accounting for 7 % of the $ 146 billion sum value locked in decentralize protocols as of Friday, surpassing Curve, SushiSwap, and Lido in the process, according to DeFi Llama .
Over the past 24 hours, the market capitalization for DAI has besides increased by roughly 2 %, rising from $ 6.34 billion to $ 6.47. This increase, though rebuff, would indicate that users have recently turned to Maker to mint more DAI.

There ‘s been a lot of interest in MKR and its DAI stablecoin as Terra continues to crater .

Terra validators halted the blockchain for about two hours yesterday, resumed validate transactions, and then halted it again a few hours late .
Since then, the LUNA token has gone to $ 0.0000353, down 99.9 % from yesterday. interim, the TerraUSD algorithmic stablecoin, UST, has fallen to $ 0.19, polish 69 % over the past 24 hours. As the token and stablecoin fell, Binance besides made good on its plans to halt trading and delist them .

What is Maker?

Maker is a DeFi lending and borrow protocol. Users lock up their cryptocurrency— Bitcoin or Ethereum, for example—as collateral in a Maker Vault and mint DAI against it. Their assets stay locked in the vault until they ‘ve repaid their DAI .
DAI is an algorithmic stablecoin like UST. But unlike UST, it ‘s overcollateralized. That means when users lock up their crypto and borrow against it, they ‘re allowed to borrow DAI worth 55 % to 75 % of their collateral. This mannequin is much safe, according to some experts .
“ partially collateralize stablecoins have repeatedly failed over and over, ” Nik Kunkel, former steer of backend services at Maker, told Decrypt  earlier this week. “ They can not solve the cardinal trouble of bank runs when the peg is under pressure. ”

DAI collateral backing and stats. Source: Dai Stats.
In a Twitter ribbon yesterday, MakerDAO explained how the vault work and why bearish markets trigger forced liquidations of collateral to maintain those overcollateralized ratios .
“ The Maker Protocol is healthy, liquid, and solution with a 164 % collateralization ratio and billions in fluidity reserves, ” MakerDAO wrote in a tweet. “ All DAI is overcollateralized, and its peg is american samoa strong as this Decentralized Protocol. ”

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Category : Coin