Rising Tide
MKR, the governing token of the $5.3 billion decentralized finance (DeFi) lender MakerDAO, has experienced a significant surge, reaching near a one-year high on Friday.
The surge followed the introduction of a token buyback program, which removes MKR from the market and reduces its supply.
Buyback Details
The so-called Smart Burn Engine periodically uses excess DAI stablecoins from Maker’s surplus buffer to purchase MKR from a UniSwap pool. The program was deployed this month and became live on Wednesday.
In the last 24 hours, the protocol has bought back $230,000 worth of MKR, and at this pace, it is expected to purchase approximately $7 million worth of tokens in the next month.
Market Impact
MKR’s rise has outperformed the broader crypto market, which has seen a 4.6% decline. The token’s current market capitalization is around $1 billion, and the buyback program is projected to reduce supply by 0.7% per month.
Evolution of MakerDAO
Maker is one of the oldest and largest DeFi lending protocols and also issues the $4.6 billion DAI stablecoin. Governed by a decentralized autonomous organization (DAO), MKR holders vote on governance proposals.
MakerDAO is undergoing a significant transformation, including upgrades to the DAI and MKR tokens and a restructuring into smaller, autonomous organizations (SubDAOs) capable of issuing their own tokens.