- MKR, the native token of Maker Protocol has achieved a two-year high record, although the price is still away from its ATH
- With the surge, the fundamentals of the token have improved
- The surge in the supply of DAI seems to has increased the value of the token
On Wednesday, MKR, an Ethereum-based administration token, surged to achieve a high record after more than two years. At press time MKR was trading at the level of more than $1,000, which was an intraday gain of approximately more than 40%. However, the token is still far from the price level of the $1,798.70 record created back in January 2018. According to several analysts, the recent bull run was just a long-awaited result of the rapid growth of the DeFi sector.
The fundamentals of the MKR token have improved
Following the surge in the DeFi space, recently the total value locked in all the projects has reached to $21.6 billion. According to Ryan Watkins, a research analyst at Messari, the basics of the native token of Maker Protocol have improved over the period since last summer, as back then the token remained dormant. Ryan also added that when the token was established, it did not create much revenue due to the interest rate charged on users into existence was 0%. Despite such days, since last summer, the MKR token has the ability to raise the rate of interest, and create huge gains.
Soaring supply of DAI has increased the value of the token
According to Yan Liberman, the founder of Delphi Digital, a research and consulting boutique, the surge in the price of MKR is having relation with the soaring supply of DAI, which is the native stablecoin of MakerDAO. A DAI is built when Ethereum users deposit digital assets into the Maker Protocol and borrow DAI against such assets. It is also known that MKR token holders get rights to vote on the development of the protocol and DAI.
Other possible reasons behind the soaring price
According to several analysts, the recent bullish behaviour of the entire cryptocurrency market has possibly triggered the price of the MKR token. According to Ryan, the recent excitement in the entire crypto sector has provided the possibility for the tokens value to be recognized. On the other hand, Denis Vinokourov is the head of research at the prime brokerage Bequant. The recent increment in the debt ceiling, which came after the approval of an executive vote, has a more significant contribution to the price rally of MKR token.
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