Maker (MKR) Crypto Price Pops as DAI Stablecoin Outshines Terra’s UST

It is a brutal week for the Terra (LUNA-USD) crypto and its sibling stablecoin. Huge losses in both projects have also sent the many other tokens under the Terra umbrella into disarray. However, the tragedy of one network is turning into celebration for anther. The Maker (MKR-USD) network is one such example; as TerraUSD (UST-USD) shrinks, users are flooding into the Maker crypto as an alternative.

A concept Maker (MKR) token in front of a trading chart.
Source: Shutterstock

Maker is a decentralized autonomous organization (DAO). Members of the Maker community are DAO members — they get to participate in the community by holding MKR token. By virtue of being a DAO, each token-holding member has the right to field proposals for changes to the network. Other users can then vote on these proposals, with members who own more Maker crypto having greater voting power.

The central point to the community, and the focus of community proposals, is the Dai (DAI-USD) stablecoin. Dai is the fifth-largest stablecoin in the world, boasting a market capitalization of $6.7 billion. It is the crux of many DeFi lending and staking protocols, where users can collateralize other assets for DAI loans. Users can also stake their DAI for passive income without being exposed to the price volatility of unstable cryptos.

Maker Crypto Sees Boost From Terra Volatility

The Maker crypto is a strong network in its own right, boasting a hefty user base and one of the most popular DAO networks in the world. But today, MKR is getting a boost as Terra continues to struggle.

News of Terra’s massive plunge today has been taking up much of the spotlight. As the UST stablecoin lost its $1 peg, investors got to see the worst-case scenario for a top project. The stablecoin ended up sinking to 30 cents even after the network’s Luna Foundation Guard used $1.5 billion in reserve assets to stabilize the project. LUNA simultaneously took a dive, falling from $86 to under $1 in a single week. Most of the losses came through the early hours of this morning.

It seems that Maker is the refuge Terra users are finding as the project continues to suffer from the turbulence. DAI is a similarly sized stablecoin to UST in terms of market cap, and the DAO structure is friendlier to users than centralized stablecoins like Tether (USDT-USD). Trading volume of the Maker crypto is up over 300% in the wake of Terra’s losses, showing further evidence of this flight out of the Terra network and into other stablecoin projects. A price boom earlier in the day brought MKR prices up over 60%, but it has since cooled.

On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.

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