- MakerDAO’s DAI was safely collateralized, but interest in it was declining at press time.
- Active development offers hope for MakerDAO’s future.
Following the collapse of SVB and the stablecoin saga, many have lost faith in crypto-backed stablecoins.
Read Maker’s [MKR] Price Prediction 2023-2024
In an attempt to restore faith in DAI, on 17 March, MakerDAO posted data demonstrating how DAI is safely collateralized. The 5.7 billion DAI in circulation is backed by $8.7 billion worth of collateral at a 161% collateralization ratio, according to MakerDAO’s tweet. It is mostly supported by USD Coin [USDC], followed by Ethereum [ETH] and Real-World Assets.
5.7 billion DAI in circulation backed by $8.7 billion worth of collateral at a 161% collateralization ratio.
Data is always publicly and transparently available in real-time.
→ https://t.co/365P0aZXZM pic.twitter.com/e6SKTjWFvt
— Maker (@MakerDAO) March 17, 2023
In DAIre need of positivity?
Despite this announcement, DEXes showed a decreased interest in DAI.
Source: Dune Analytics
Moreover, the stablecoin’s market cap decreased from $6.3 billion to $5.6 billion from 16 March to press time. Its velocity and daily active addresses also dropped, indicating that the usage of DAI had slowed down.
Source: Santiment
Impact on Maker
The poor health of DAI also impacted the MakerDAO protocol, with Messari’s data revealing a 17.84% decrease in revenue generated by the protocol over the past week. Its TVL fell from $8.3 billion to $7.78 billion during this period.
However, things may change for the better for MakerDAO going forward. Token Terminal’s data showed a substantial increase in the number of active developers and code commits to the MakerDAO protocol at the time of writing.
This spike in development could indicate the addition of new features and updates to the protocol, which could attract more users to the network in the future.
Source: token terminal
As for the protocol’s token, MKR, there wasn’t much selling pressure on holders, as the MVRV ratio declined in the aforementioned time period. This suggested that long-term MKR holders are still holding onto their tokens, despite the recent decline in DAI’s health.
Realistic or not, here’s MKR market cap in BTC’s terms
Source: Santiment
Additionally, a number of short-term MKR holders have sold their holdings, as shown by the declining long/short difference.
As the fees collected by MakerDAO continued to fall at press time, it will be difficult for the protocol to keep up with making improvements on the network as time goes on.
