Maker prices are up by nearly 14%. At press time, the coin is trading at $673.19 and has recorded a volume of $73,74,514 in the past 24 hours. The reasons for the price rise could be attributed to its native token DAI hitting $100 million debt ceiling.
Protocol Upgrade Effect in Play
Maker (MKR) is used to govern the Maker platform, and has a volatile price which is determined by market supply and demand. Whereas, DAI is a stablecoin, with its value tied to the U.S. dollar, and it is suitable for making payments or as a collateral or savings instrument. Both are native tokens of Maker DAO, an Ethereum based decentralized lending protocol behind DAI, a stablecoin that is pegged 1:1 against the USD. Unlike, True USD and Tether(USDT), the stablecoin is backed by Ether(ETH). In order to automate the lending of DAI, MakerDAO leverages Ethereum smart contracts. Presently, there are 1,716,042 ETH, or 1.58 percent of the total supply, locked in the DAI smart contracts.
To keep prices stable, MakerDAO usually issue out new DAI tokens while simultaneously increasing stability fee. The sudden price surge in MKR token can be attributed to DAI stablecoin hitting its 100 million token debt ceiling. This implies that currently 100 million DAI tokens have issued in loans and no more DAI can be issued until the debt limit is raised higher. However, plans to do the same are already underway. Per a tweet by Maker on its official Twitter handle, the Maker Foundation Interim Risk Team has placed an Executive Vote proposal into the voting system to lowering the DAI Stability Fee and increasing the debt limit to $120 MM.
The Maker Foundation Interim Risk Team has placed an Executive Vote proposal into the voting system to lower the #Dai Stability Fee to 5% AND raise the debt ceiling to 120 million.