How DAI seeks growth amidst rising stablecoin competition

• DAI struggled to compete with USDC and USDT despite being the largest stablecoin backed by a DAO.
• MakerDAO faces declining revenue and negative sentiment.

According to 28 May’s data from Token Terminal, stablecoin DAI held the position of being the largest stablecoin managed by a DAO. However, it faced challenges in competing with the likes of USD Coin [USDC] and Tether [USDT].

At press time, DAI’s market capitalization stood at $4.8 billion, while USDC and USDT had market caps of $83.4 billion and $29.06 billion, respectively. Unfortunately, DAI’s network growth was declining, indicating reduced interest from new addresses.

This decline raised questions about DAI’s ability to maintain its position as the leading DAO-backed stablecoin.

Source: Santiment

MakerDAO’s efforts to attract users

To encourage more users to hold DAI, MakerDAO’s governance has proposed several changes. An upcoming Executive Vote seeks to raise the Dai Savings Rate (DSR) from 1% to 3.33%. By providing a more attractive interest rate, MakerDAO hopes to entice users to retain and accumulate DAI, which could fuel the stablecoin’s growth.

While MakerDAO endeavors to improve the network, declining revenue and treasury earnings pose challenges. According to Token Terminal, MakerDAO’s revenue has dropped by 9.4% over the last month. This decrease could limit the protocol’s ability to make necessary improvements to the network and enhance user experience.

Furthermore, the treasury holdings of Maker fell by 1.7% during the same period, highlighting potential liquidity concerns and the need for effective treasury management strategies.

Source: Token Terminal

State of the Maker token

Over the past few days, the price of MKR has experienced an increase, driven by rising interest from whales. This surge in price indicates renewed enthusiasm from larger investors for the MKR token.

Notably, the MVRV ratio has remained negative, suggesting a lack of selling pressure among MKR holders. This could indicate that existing MKR holders are holding onto their positions, which may contribute to price stability in the short term.

Realistic or not, here’s MakerDAO’s market cap in BTC’s terms

Despite the price surge, weighted sentiment within the crypto community towards MKR has been predominantly negative.

Source: Santiment

Moreover, traders have displayed a growing bearish sentiment towards MKR, as evidenced by an increase in short positions taken against the token. This bearish sentiment could be influenced by the negative sentiment in the broader market and the perception of challenges faced by MakerDAO.

Source: Coinglass