{% hint style="warning" %} This documentation describes certain core aspects of MakerDAO's protocol that could change over time. Be aware that parts may be inaccurate or out of date. {% endhint %} # MKR Token MKR is an ERC-20 token native to the Ethereum Blockchain and serves as the governance token within the MakerDAO protocol, granting holders voting rights to actively shape decisions and uphold system stability. The MKR token embodies MakerDAO's decentralization, empowering token holders with decision-making authority, nurturing an inclusive governance system. Active participation in governance decisions and ensuring protocol stability are pivotal roles that MKR token holders play in upholding MakerDAO's integrity and effectiveness. The MKR token plays a vital role in shaping the future of the decentralized ecosystem. ## Purpose of MKR MKR token holders have the power to influence key decisions and shape the direction of the MakerDAO ecosystem. Through the MKR token, participants have the ability to actively engage in the governance process and vote on crucial protocol upgrades, risk parameters, and other important matters that affect the system and its growth. ## Risk Management and Debt Auctions In times of unexpected events or system risks, the MKR token plays a critical role. In the event of undercollateralized Vaults resulting in losses, MKR is minted and sold through debt auctions to cover the deficits, ensuring the integrity and sustainability of the Maker Protocol. ## Governance Powers MKR token holders can vote on issues such as collateral types, stability fee adjustments, debt ceilings, and other parameters that ensure the stability, security, and growth of the Maker Protocol. This governance structure empowers token holders to collectively determine the future direction of the ecosystem. ## Value Accrual Beyond its governance capabilities, MKR also serves as a mechanism for value accrual. As the MakerDAO ecosystem continues to grow and prosper, the demand for MKR increases. This demand is driven by the intrinsic value of participating in the governance process and the potential benefits derived from holding MKR tokens.