Quick summary: Our recommendation is to use eToro to short Maker. They have the most popular cryptocurrencies on offer, great support, and have an easy system for shorting cryptocurrencies in general.
While there are a lot of options out there for buying MKR, shorting is a different story. Luckily for us here in Australia, we do have a few crypto brokers and exchanges that allow for CFDs and shorting.
One of those brokers is eToro, which we’ll be using for this guide. Let’s get started!
How to Short Maker in Australia
A quick recap first on what shorting actually is: The main objective of shorting or short selling is to make a profit (of course). The idea is to sell a stock/cryptocurrency hoping it will drop in value so you can buy it back later for cheaper, thus creating a net profit.
Shorting Maker can be done in 4 easy steps:
1. Choose a cryptocurrency exchange
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 broker to follow along, they all work very similarly.
2. Create an account on the crypto trading platform
Let’s start with just signing up with eToro.
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 options when it comes to depositing AUD into your eToro Account. These include a bank transfer, credit card, debit card, PayPal, and more.
4. Short Maker
Now for the actual shorting:
- Starting off at the search bar at the top, find Maker by entering the name or symbol.
- Then on the crypto page/section, on the right side, hit the TRADE button to enter the trading interface.
- At the top of the trading interface: Click on sell to short sell the stock.
- 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!
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.
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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 complex compared to eToro, they do have more cryptocurrencies on offer.
Frequently Asked Questions
Can I short Maker on Binance?
Yes, you can short Maker on Binance. They have over 300 cryptocurrencies on offer and specialise in the crypto market. They also have a great app and competitive fees.
Maker token (MRK), which is a governance token, can be used to recapitalize and govern the Maker protocol. Token holders have the ability to vote and participate in changes to the protocol's smart contracts and system parameters like Stability Fees or the Dai Savings rate (DSR).
Maker is a smart-contract lending platform that allows users to borrow money by locking in collateral in return for Dai. It was created by the Maker Foundation in 2015. The goal of Maker Foundation is to open-source this project and offer economic freedom to everyone, anywhere. It launched the Maker governance token (MKR), and its first stablecoin version known as the Single Collateral Dai, which used Ether as collateral.
Two years later, in 2019, the Foundation published the Multi-Collateral Dai. This was a way to phase out SAI. This platform is widely used and has a total of $2.58 billion (TVL) in total value.
Two fundamental functions of the Maker token include governance and recapitalization. MKR token owners are responsible for monitoring, participating in, and voting upon proposals or changes to the Maker protocol. Two types of polls can be used for this purpose, which are done through smart contracts: i. proposal polling and II. executive polling.
The Maker protocol operates in the same manner as a bank. It lends money and charges interest on savings and borrowings in Dai, its native stablecoin.
These services are not available in traditional finance. They require that the client has sufficient collateral, strong credit scores and compliance to KYC and criminal history checks. Maker, however, requires that users only provide cryptocurrency as collateral. The KYC is not required and loans can be issued using smart contracts.
In practice, a Dai loan would be obtained by heading to Oasis and locking in collateral in smart contracts known simply as Maker Vaults. The amount of collateral that has been secured and the ratio of collateralization would determine the loan amount.
If Ether (ETH), the collateralization ratio for ETH, is 150%, then the user would need 2.5 ETH to secure every Dai he/she makes. Similar to regular loans, a Dai loan can incur debt and be subject to an interest rate known as the Stability Fee. The Dai Savings Rate mechanism, (DSR) can help you save money.
Maker token is used to determine which cryptocurrencies are suitable for collateral, the required collateralization ratio for these assets, their associated Stability Fees, as well as the DSR. This keeps the Maker ecosystem running smoothly. It serves two purposes: it regulates Dai’s soft-peg towards the US dollar and keeps Vaults overcollateralized.