Maker
Maker is a top decentralized lending protocol that lets anyone mint or redeem the DAI stablecoin by depositing crypto and tokenized assets as collateral.
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Invest- Documentation
- Auditors
- Please see our FAQ on experienced auditors
- Website
- Token: MKR
- Tags: Lending
- TVL: $5.8B (Rank #9)
- TVL Ranking by Lending: #0
- Blockchain: Ethereum
- Chain TVL
- Ethereum: $5.77B
- Code reviewed by several experienced auditors including Trail of Bits and PeckShield
- Public team promotes accountability
- No documented protocol hacks since launch
- Latest protocol version launched in 2019; maturity over one year minimizes technical risk as smart contracts are well battle-tested
- Top 1% by total value locked reduces risk
- Requires members of a DAO to vote on-chain for approving contract upgrades
- Timelock is less than 48hrs, which provides users with less time to exit if any malicious upgrades are approved
- At least one critical governance issue documented
- Low voting power concentration reduces risk
- No death spiral concerns
- Robust controls to mitigate oracle price manipulation
- Isolated markets enable asset risks to be contained to each individual pool without impacting the entire protocol
- Poor controls to risky borrowing due to onboarding of Ethena stablecoins as collateral
- Limited on-chain liquidity to efficiently liquidate Ethena collateral in case of default
- Robust methods to accrue protocol reserves
- Maker is one of the oldest DeFi protocols and its DAI stablecoin has survived countless tests of market volatility
How Maker works
Maker is a decentralized borrowing protocol that allows borrowers to draw loans against crypto assets like ETH as collateral. Loans are paid out in DAI, a USD pegged stablecoin with a collateralization ratio of at least 120%. The DAI peg is further supported by the Peg Stability Module (PSM). The PSM is a decentralized exchange that allows users to swap USD stablecoins for DAI at a 1:1 rate.
How Maker makes money
Maker collects a stability fee on all DAI generated through its smart contracts. The stability fee is a variable-rate fee that continuously accrues to the generated DAI by a user (must be paid in DAI). Part of the stability fee is set aside to sustain the protocol's operations including the Dai Savings Rate (DSR), risk teams, and other protocol costs. All surplus DAI collected from platform revenue including liquidation fees are deposited into the Maker Buffer. When the amount of DAI reaches a certain level, those funds are placed in a surplus auction whereby Maker uses the DAI to buy MKR governance tokens and burn them to reduce the circulating supply.
How you make money on Maker
You can deposit crypto assets into the Maker vaults to mint DAI to be used across DeFi for lending and market making. The Oasis front-end app also offers a feature that allows you to earn Uniswap V3 higher trading fees with DAI through recursive leverage.
