Maker (MKR) is an Ethereum-based DeFi lending platform founded by Rune Christensen, that allows users to lock ETH into smart contracts to mint Maker’s Dai stablecoin. Major decisions like protocol upgrades are made by MakerDAO, a decentralized autonomous organization (DAO) made up of MKR token holders.

MKR and DAI are the native cryptocurrencies of the MakerDAO protocol. In addition to enabling governance for holders, MKR also fluctuates with the price of DAI to ensure the stablecoin remains at $1 and gives holders the opportunity to receive interest from outstanding deposits.

The Maker price reached its all-time high of $6,349 at the start of May 2021 before tracking downwards toward the $2,000 mark over the next two months. It subsequently traded in the $2,000-4,000 range for the rest of the summer and into the fall.

Since MKR stabilizes DAI, the token was launched without an initial coin offering (ICO). However, investors looking to participate in the platform’s governance functionality have invested in MKR tokens including Paradigm, Dragonfly Capital, 1Confirmation and others.

The Maker protocol is open source and was developed by community developers and the Maker Foundation. As the project moved toward decentralization, the Maker Foundation transitioned control of the project to MakerDAO, a decentralized autonomous organization (DAO) that gives MKR holders the ability to decide protocol updates through governance.

The MakerDAO ecosystem is governed by MKR holders in a direct, on-chain voting system. Proposals for upgrades to MakerDAO can be proposed by anyone, and any MKR holder can use one MKR to submit one vote.

In addition to governance, MKR ensures the stability of the DAI stablecoin. DAI is a full-reserve stablecoin, meaning that it functions off of a cash reserve of Ethereum native coin ether (ETH) and other assets to back its liabilities. When someone makes a deposit into the MakerDAO, they are given DAI as a reward. Outstanding deposits are changed interests, which in turn, are given to MKR holders.

In the event of a crash of ETH price or other cryptos held in the full-reserve system, the MakerDAO system will generate more MKR in order to offset the reserves and maintain stability in the DAI stablecoin.

The original Maker protocol launched in December 2017 as a Single Collateral Dai (SCD) protocol. The SCD protocol was only able to use Ethereum as a collateral asset for loans, but nonetheless generated $100 million in debt. Even as the collateral value dropped, the Dai stablecoin continued to retain its peg at $1 and became one of the most well known algorithmic stablecoins.

In September 2018, Andreessen Horowitz’s (a16z) invested $15 million in MakerDAO, buying 6% off the total MKR supply. This was one of the first investments made by a16z’s crypto fund.

In early 2019, Maker founder Rune Christensen presented a red pill, blue pill dilemma to the Maker staff. By taking the red pill, the Maker protocol would focus on government compliance and integrating Maker into the global financial system. On the other hand, the blue pill option would lead to the creation of Multi-Collateral Dai (MCD) and the end of funding for the Maker Ecosystem Growth Foundation. The dilemma became a point of contention among the Maker staff, which was highlighted in former Maker CTO Andy Milenius’ letter “Zandy’s Story.” In the letter, Milenius called the events the most difficult challenge he faced during his 3.5 years working on the project.

According to the letter, there was a faction of members at Maker that didn’t want to pick either option. The “Purple Pill” group started as a Signal group chat among Maker board members that discussed non-binary options for the red pill, blue pill dilemma. According to a leaked legal letter directed to the Maker Ecosystem Growth Foundation, Christensen believed that the board members were committing conspiracy against the Maker team and had them all fired for breach of fiduciary duties.

In November 2019, MakerDAO upgraded from SCD to a Multi Collateral Dai (MCD) protocol.