How To Short Maker (MKR)

    • James Page

James HeadshotAuthor: James Page - Last Updated on June 28, 2022

Summary: Shorting Maker is pretty straightforward, all you need is a cryptocurrency exchange that allows for short selling. While there are a few exchanges out there that have added the ability to short crypto, our recommendation is to use eToro. They’re well-known, have a global presence, and are trusted by millions of users from 100+ countries.

We’ll be using eToro in our guide, you can sign up with one of the sign-up buttons below.

Global: Sign up with eToro

USA: Sign up with eToro US

Maker

Before we get started, let’s quickly explain what shorting is (for those that are new to it). Shorting is the practice of selling a cryptocurrency hoping it will drop in price so you can buy it back later for cheaper… which, if successful, will give you a net profit.

It might sound a bit complex but don’t worry, it’s a lot easier than you might think.

How to Short Maker

Shorting Maker can be done in 4 steps:

  1. Find a cryptocurrency trading platform
  2. Sign up with the exchange
  3. Fund your account with fiat or crypto
  4. Short Maker

1. Find a crypto trading platform

As mentioned before, for this guide we’ll be using eToro as they offer the ability to short the most common cryptocurrencies.

You can, of course, use any other crypto trading platform that allows for short selling.

etoro crypto

2. Sign up with the crypto exchange

Let’s start with creating an account on eToro.

Global: Sign up with eToro

USA: Sign up with eToro US

 

eToro sign up form

The sign-up process is very easy and quick, as is the verification that needs to be completed afterwards so you can get started.

3. Funding your eToro account

Next is funding your account. You have several deposit methods to choose from when depositing funds into your eToro Account. These include a bank transfer, credit card, debit card, PayPal, and more.

4. Short Maker

These are the steps to follow to execute a short sell:

  1. Go to the search bar at the top, find Maker by entering the name.
  2. On the crypto page/section, on the right side, hit the TRADE button to enter the trading interface.
  3. At the top of the trading interface: Click on sell to short the crypto.
  4. Enter the amount for which you want to sell Maker and click on “Open Trade”.

Once you’re ready to close the trade, hopefully when the value of Maker has dropped, go to your Portfolio, find the Maker trade, and click on the red cross to close the trade.

If your assumption/prediction was right, then the profit will be added to your account after closing the trade. If you were wrong on the other hand, you’ll incur a loss which will be debited from your eToro account.

Congratulations, now you know how to short Maker!

Global: Sign up with eToro

USA: Sign up with eToro US

 

Disclaimer: Trading, investing, and dealing with digital and cryptocurrencies might involve a lot of risks. Their prices are volatile and performance is unpredictable. Their past performance is no guarantee of future performance.

Affiliate Disclosure: This site is supported by its users. We may receive commissions for purchases made through the links on our site. This does not impact our reviews, guides or comparisons.

 

Where to Short Maker (MKR)

Aside from eToro, the other major exchange you can use is Binance.

While Binance tends to be a bit more advanced when compared with eToro, they do have a lot more digital assets to trade with.

 

Frequently Asked Questions

Can I short Maker on Binance?

Yes, you can short Maker on Binance. They have over 300 cryptocurrencies on offer, have a decent phone app and a lot of advanced trading features.

About Maker

Maker token (MRK), is a governance token that is used for governing and recapitalizing the Maker protocol. Holders can vote on system parameters and changes to smart contracts, including the Dai savings rate (DSR), as well as voting for them.

Maker is an open-source smart contract lending platform. Users can take out loans using Maker's collateral. In exchange for Dai, Maker will allow them to lock in collateral. The Maker Foundation created it as an open-source project in 2015 to give economic freedom and opportunity to all people. In 2017, it launched Maker governance tokens (MKR) as well as its first stablecoin iteration, the Single Collateral Dai or (SAI), that used Ether to collateral.

Two years later, the Foundation released Multi-Collateral Dai in 2019 and phased out SAI. The platform is widespread in use and currently holds $2.58 Billion (TVL) of total value.

The Maker token serves two main functions: i. governance and ii. recapitalization. MKR token holders, in terms of governance, are responsible to monitor, participate, and vote on proposals or other changes to ensure the health of the Maker Protocol. This can be done using two types of smart contracts: proposal polling or executive polling.

The Maker protocol functions in the same way as banks. It makes loans and charges interest when borrowing or saving in its native stablecoin, Dai.

Traditional finance services require the fulfillment of certain conditions, including sufficient collateral, credit scores that are high, criminal background checks, and compliance with KYC. Maker makes it easy for users to offer cryptocurrency as collateral. Loans are granted in a decentralized way via smart contracts, so there is no need for KYC.

In practice, a Dai Loan is obtained by heading over Oasis to lock-in collateral in Smart Contracts known as Maker Vaults. Two factors will determine the loan amount: 1) the amount of collateral you have locked in and 2) the percentage of collateralization.

For example, if the user chooses Ether as collateral and the collateralization percentage of Ethereum is 150%, the user would need lock-in 1.5ETH for every 1 Dai that he/she produces. The Stability Fee, which is an interest charge on a Dai Loan, will be charged to the borrower. But, savings can be made through the Dai Savings Rate mechanism.

Maker token ensures that the Maker ecosystem is running smoothly. It determines which cryptocurrencies can be used for collateral, the necessary collateralization ratio and associated Stability Fees. It acts as a soft-peg for Dai to the US dollar, and keeps Vaults well-collateralized.

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