Maker is an asset-backed decentralized “stable coin” based on the Ethereum blockchain. Stable coins are a revolutionary approach to digital money as they remove large price volatilities in the coins.
Maker’s autonomous smart contract system is designed specifically to react to market fluctuations, keeping the price of 1 Dai equivalent to US$1. Each Dai is backed by Ether tokens as collateral, and is secured with an Ethereum smart contract.
In the event that the price of Ether drops below the predetermined threshold, the smart contract would automatically liquidate, keeping the collateral at a safe level and therefore preventing the Dai token from collapse.
By holding a MKR token, you become a member of Maker’s DAO and are entitled to certain rights as defined in Maker’s technical documents.