Understanding the Maker Protocol

TL;DR

This paper analyzes the Maker Protocol, a pioneering DeFi application on Ethereum that enables users to create stablecoins and is governed by MKR holders, highlighting its significance and operational functions.

Contribution

It provides an in-depth analysis of the Maker Protocol's structure, governance, and role in the DeFi ecosystem, emphasizing its innovative aspects and adoption.

Findings

Maker Protocol enables creation of Dai stablecoin on Ethereum

Governance is conducted through MKR token voting

Maker Protocol is among the largest DeFi applications

Abstract

This paper discusses a decentralized finance (DeFi) application called MakerDAO. The Maker Protocol, built on the Ethereum blockchain, enables users to create and hold currency. Current elements of the Maker Protocol are the Dai stable coin, Maker Vaults, and Voting. MakerDAO governs the Maker Protocol by deciding on key parameters (e.g., stability fees, collateral types and rates, etc.) through the voting power of Maker (MKR) holders. The Maker Protocol is one of the largest decentralized applications (DApps) on the Ethereum blockchain and is the first decentralized finance (DeFi) application to earn significant adoption. The objective of this paper is to analyze and discuss the significance, uses, and functions of this DeFi application.