- DSR’s TVL exceeded $1 billion as the number of borrowers on the protocol also increased.
- Maker’s increasing narrative around RWAs could be bullish for the MKR token.
Over the past year, the crypto market has undoubtedly put many projects in unwanted financial positions. While the last few months have brought a respite of sorts, not all countries have been able to boast significant revenues and a burgeoning ecosystem, regardless of the torrid market conditions. But that wasn’t the case with MakerDAO [MKR].
Realistic or not, here it is The market cap of MKR in ETH terms
Everyone hails the “rainMaker” and DAI
As a project that develops technology for savings and loans, while housing a stablecoin on the market Ethereum [ETH] blockchain has shown Maker why the aforementioned bullish precedents won’t be slowing down anytime soon.
One of the reasons MakerDAO has been able to experience growth and maintain such high standards is DAI, it is decentralized stable currency. In August, MakerDAO announced that it had increased the DAI Savings Rate (DSR) to 8%.
So it was no surprise when Savings DAI’s Total Value Locked (TVL) exceeded $1 billion. For context, Savings DAI is the yield-bearing version of the decentralized stablecoin. This system allows DAI holders to lock in their assets and earn returns on them over time.
Source: Defi Llama
At the time of printing, TVL from DSR further increased to $1.64 billion. This implies that the 5.00% Annual Percentage Yield (APY) offered by the protocol was enough to get more DAI holders into the system.
Other roles DAI has played in Maker’s growth include its utility acting as a low-fee coin, gas payments for Ethereum, and its stability in volatile markets.
More borrowers, more income
Additionally, Maker has generated a total of $10.7 million in revenue over the past 30 days. This data was according to Token Terminal. When audited on an annual basis, the protocol’s revenue is over $137 million.
Source: Token terminal
This made MakerDAO the seventh largest monetization protocol at the time of writing.
First of all, Maker doesn’t generate its revenue through gas like Ethereum. Instead, the interest that borrowers pay on the platform helps her gain. The increase therefore indicates that there has been a lot of lending activity through the protocol recently.
According to Defi Llama, the growth experienced has also helped Maker’s treasury. At the time of writing, MakerDAO’s coffers stood at $171.61 million. The native token MKR made up 52.12% of this number, while DAI’s share of this amounted to 29.62%.
Source: Defi Llama
Thanks to MakerDAO’s impressive network, MKR has also been able to achieve good performance. While many altcoins face downsides for a one-year performance, MKR could boast of its 71.21% increase in the past 365 days.
MKR is not left out
While there may be many reasons for the rise, MKR’s relevance in the market could be linked to its fundamental tokenomics. For the uninformed, the MKR token serves two main purposes. One is for governance and the other acts as a recapitalization source.
As a governance token, MKR allows literally anyone to submit a proposal for a vote. However, not everyone is allowed to vote on changes to the protocol. Its function as a recapitalization source lies in the fact that it could expand token supply through a debt auction.
However, this would only be necessary if the system debt exceeds the surplus. Meanwhile, MakerDAO’s network growth has slowed, Santiment data shows. Network growth, based on the on-chain analytics platform definition, is the number of new addresses interacting with a network.
Through interaction, an increase in network growth would mean an increase in transmission through this new cohort. On the other hand, a decrease indicates a decrease in the number of new address transactions. Therefore, Maker’s network growth implies that traction on the network has decreased over the past 30 days.
MKR’s circulation during the same period has also decreased. But unlike network growth, a decline in this metric could be a positive signal. The circulation of a cryptocurrency measures the number of tokens used over a period of time.
Usually high blood circulation often coincides with short-term selling pressure. Conversely, low circulation means possible stability and a potential for asset price appreciation. This was also evident in MKR’s 24.49% rise to $1,452 over the past 30 days.
Source: Santiment
Rivalry cannot stop bullish trends
Moreover, it is not a new development that MakerDAO has established itself as an authority in the world Category Collateralized Debt Position (CDP). However, it still faces competition from emerging projects Lybra Finance and Liquidity.
In addition, other DeFi protocols included Curve Finance [CRV] And Aaf [AAVE] have joined the decentralized stablecoin market. So Maker may have to keep its eyes peeled, as these projects could be determined to grab some of DAI’s market share.
Regardless of the rivalry between the brewers, there were still some catalysts that could put Maker on the bullish side. For example, the introduction of the subDAOs after the Endgame Its completion could put it back in the spotlight.
How many Worth 1,10,100 MKRs today?
The story surrounding the deployment of Real World Assets (RWAs) on the protocol could also be beneficial for Maker. Over the past year, risk-weighted assets, defined as a type of collateral from legal entities, have grown within DeFi.
For many market participants, projects that take this development seriously tend to reap the rewards of a full-blown bull market.