Learn how to make the most of DeFi

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DeFi, or decentralized finance, has revolutionized the way people interact with financial systems by removing intermediaries and enabling open, permissionless access to lending, borrowing, trading, and investing. At the heart of this transformation are foundational protocols like MakerDAO, governed by its native token MKR, and innovative investment vehicles such as the DeFi Pulse Index (DPI). These tools empower users to participate in a transparent, trustless financial ecosystem built on Ethereum.

Understanding how these components work—and how they interconnect—can help both newcomers and experienced users maximize their DeFi experience.

What is Maker?

Maker (MKR) is the governance token for MakerDAO, one of the earliest and most influential projects in the decentralized finance space. Launched in 2017, MakerDAO operates on the Ethereum blockchain and enables users to generate Dai, a decentralized stablecoin soft-pegged to the U.S. dollar.

Dai maintains its stability through an over-collateralized system: users lock up assets like ETH in smart contracts called Collateralized Debt Positions (CDPs) and receive Dai in return. The protocol ensures that the value of the locked collateral exceeds the value of the issued Dai—typically by a ratio of 1.5:1—helping maintain price stability even during market volatility.

As one of the first DeFi applications to gain widespread adoption, MakerDAO introduced a new paradigm: a stablecoin not issued by a centralized institution but maintained through code and community governance. This innovation paved the way for the explosive growth of DeFi, offering users a reliable store of value amid crypto's inherent volatility.

Today, more than 9.7 billion Dai are in circulation, backed by over $2 billion in locked value. Despite occasional fluctuations—such as when Dai briefly spiked to $1.10 in March 2020—the protocol’s self-correcting mechanisms have proven resilient, restoring parity through governance-driven adjustments.

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Who created Maker?

MakerDAO was founded by Rune Christensen, a Danish entrepreneur and graduate of the University of Copenhagen’s Business School. His interest in blockchain-based financial solutions was sparked by the 2014 Mt. Gox hack, which exposed the vulnerabilities of centralized exchanges.

In response, Christensen launched MakerDAO in 2015 with a vision: to create a transparent, decentralized financial system accessible to anyone with an internet connection. His work laid the foundation for modern DeFi, demonstrating that autonomous organizations could manage complex financial instruments without traditional intermediaries.

Under his leadership, MakerDAO evolved into a fully decentralized autonomous organization (DAO), where decisions are made collectively by MKR token holders.

How does Maker Governance work?

MakerDAO is governed entirely by its community through a decentralized autonomous organization model. MKR token holders have voting power proportional to their holdings, allowing them to propose and vote on key protocol parameters such as:

This governance structure ensures that the protocol adapts dynamically to market conditions while remaining resistant to centralized control. Every change is executed via smart contracts, making the process transparent and tamper-proof.

For example, during periods of high market stress, governance can adjust collateral requirements or incentivize stability mechanisms to protect the integrity of the Dai peg.

This level of community-driven oversight sets MakerDAO apart from centrally issued stablecoins like USDC or GUSD, which rely on corporate entities for management and reserve audits.

Why is MKR included in DPI?

The DeFi Pulse Index (DPI) is designed to track the performance of leading “blue-chip” DeFi projects—those with proven track records, strong user adoption, and sustainable development. MKR earns its place in DPI for several compelling reasons:

  1. Pioneering Role: MakerDAO was the first major DeFi protocol and remains a cornerstone of the ecosystem.
  2. Decentralization: Unlike fiat-backed stablecoins issued by private companies, Dai is fully decentralized and governed by its community.
  3. Usage & Liquidity: MakerDAO consistently ranks among the top DeFi applications by total value locked (TVL), reflecting broad trust and utility.
  4. Resilience: The protocol has weathered multiple market cycles and black-swan events, proving its robustness.

By including MKR, DPI offers investors diversified exposure to one of DeFi’s most resilient and foundational protocols.

What is DPI?

The DeFi Pulse Index ($DPI) is an ERC-20 token that represents a basket of top-tier DeFi assets on Ethereum. It functions like a digital index fund, automatically rebalancing based on market capitalization to reflect the evolving DeFi landscape.

DPI includes major protocols such as:

Holding DPI gives users instant diversification across high-utility DeFi platforms without needing to purchase each asset individually. Additionally, because DPI is built on Set Protocol, it supports advanced DeFi use cases:

This makes DPI not just an investment vehicle but a productive asset within the broader DeFi economy.

How can I buy MKR or DPI?

There are two primary ways to gain exposure to MKR:

Option 1: Buy MKR directly

You can purchase MKR tokens on major decentralized exchanges (DEXs) such as Uniswap or SushiSwap. This requires connecting an Ethereum wallet like MetaMask and swapping ETH or another token for MKR.

Option 2: Invest via DPI

For diversified exposure, consider buying DPI, which includes MKR alongside other leading DeFi tokens. You can acquire DPI through:

Many of these wallets allow direct bank account or debit card integration, enabling seamless conversion from fiat currencies like USD into DPI.

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Frequently Asked Questions

Q: Is MKR a good investment?
A: MKR has demonstrated long-term relevance as the governance token of one of DeFi’s oldest and most trusted protocols. Its deflationary model—where fees burn MKR—can create scarcity over time, potentially increasing value if usage grows.

Q: How does DPI rebalance?
A: DPI rebalances quarterly based on market cap and usage metrics. This ensures the index stays aligned with the most impactful projects in DeFi.

Q: Can I stake DPI for yield?
A: Yes! DPI can be used in various DeFi protocols to earn yield through liquidity pools, lending platforms, or yield aggregators.

Q: Is Dai truly decentralized?
A: Yes. While early versions relied heavily on ETH collateral, recent expansions include other decentralized assets and even real-world assets (RWA), all governed by MKR holders.

Q: Do I need technical knowledge to use DPI?
A: Not necessarily. With user-friendly wallets and clear interfaces, anyone can buy and manage DPI with minimal learning curve.

Q: Where can I track DPI’s performance?
A: Platforms like Defi Pulse and CoinGecko provide real-time data on DPI’s holdings, price, and historical performance.

About Index Coop

Index Coop is a decentralized autonomous organization responsible for creating and managing structured DeFi products like DPI. Built on Set Protocol—a secure, audited smart contract framework—Index Coop offers accessible financial instruments tailored for the crypto economy.

Their product suite includes:

With a strong focus on security, simplicity, and composability, Index Coop has become a key player in democratizing sophisticated investment strategies within DeFi.

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By understanding how MakerDAO, MKR, and DPI function together, users can make informed decisions about participating in DeFi—not just as passive investors but as active contributors to a new financial frontier. Whether you're buying MKR directly or gaining diversified exposure through DPI, you're engaging with some of the most resilient and innovative protocols shaping the future of finance.