Maker has reached the ranks of the top performing cryptocurrencies in recent timeframes because of its phenomenal performance. The cryptocurrency had benefitted hugely from the bull run of 2021 and was able to establish a new all-time high at a staggering price level of $6,339. The month of October was bearish for the cryptocurrency as it suffered from market corrections; however, November brings good news. MKR token has, once again, embarked on a steep uptrend. While it may still be early to predict whether the cryptocurrency will break its ATH or not, the price rally will result in high returns for holders of the cryptocurrency. At the time of writing, Maker was trading hands at $3,200. The daily performance shows an increase of 25% in the price level and 125% increase in the trading volume.
What is MakerDAO?
Maker powers the MakerDAO – the decentralized autonomous organization which issues the stablecoin DAI. The value of DAI is pegged to one US Dollar and is managed accordingly. The stability of the DAI token is maintained through Collateralized Debt Position (CDPs) through smart contracts. The MKR token is based on Ethereum’s blockchain and grants governance rights over the smart contracts of DAI. MKR holders are rewarded through fees for regulating the ecosystem.
Regulators all over the world have been trying to find ways to regulate the cryptocurrency market. Stablecoins present a more pressing issue as their working resemble that of traditional banks a lot. President Joe Biden’s Working Group on Financial Markets recently issued their report which asked for the regulation of stablecoins as soon as possible.
In light of the report, the founder of MakerDAO Rune Christensen regards 2022 to be a rough year for stablecoins. In an “Ask Me Anything” session on Reddit, the founder advised users to “be ready for the worst” in terms of stablecoin regulation. This can put the future of DAI and, in return, Maker in jeopardy.
However, the founder may have a way around for DAI. Christensen has been heavily advocating for MakerDAO to solve the problem of environmental sustainability. Per the founder, DAI can strive in environments like that of Australia, New Zealand, Canada etc. He suggests that once MakerDAO sets up operations in the above-mentioned countries which are regarded to have stable political environments, the stablecoin DAI can flourish and as the core function of Maker is to regulate the stablecoin, it will follow suit and flourish as well.
While there is a lot of uncertainty and the debate of stablecoin regulation has further increased the uncertainty in the market if MakerDAO is able to position itself as an environmental-friendly organization both DAI and Maker can flourish.