MakerDAO: DAI supply hits new lows whereas MKR stands…
- DAI supply fell to its lowest this year.
- MKR’s MVRV ratio showed that most holders were in profit at press time.
AMBCrypto reported earlier that the stablecoin’s supply rebounded in the first two weeks of the year after hitting a four-month low on the 31st of December 2023.
However, due to the fall in the prices of some of DAI’s underlying assets, its supply has declined steadily since the 11th of January.
The decline in DAI’s supply is due to the protocol’s Collateralized Debt Position (CDP) model. The CDP system acts like a self-regulating market. When the prices of assets backing DAI drop, the interest rate for borrowing automatically rises.
Therefore, borrowing becomes more expensive as new borrowers avoid taking out loans, and existing borrowers repay their loans to avoid high fees, discouraging new DAI creation.
Assessing Maker’s user activity
So far this year, the count of active monthly users on MakerDAO has totaled 2000, according to data from Token Terminal.
Although this stands at a 40% decline from the 2800 active users recorded in December, the transaction fees recorded from these users have surpassed the total recorded in December.
Data from Token a Terminal showed that in the past 20 days, transaction fees on MakerDAO have totaled $16.5 million, marking a 9% uptick from the $15.1 million registered during December.
AMBCrypto found that MakerDAO’s fees and the revenue generated from the same have risen steadily in the last year. In the last twelve months, these have each grown by 35%. In the last six months, they have risen by over 400%.
Realistic or not, here’s MKR’s market cap in BTC’s terms
MKR holders are all smiles
At press time, MakerDAO’s native token MKR traded at $1,990. While the values of many crypto assets have either declined or trended within a narrow range in the last month, MKR’s value has increased by 53%, according to data from CoinMarketCap.
Due to the price surge, MKR transactions have been predominantly profitable in the last month. An assessment of the token’s ratio of daily transaction volume in profit to loss returned a value of 2.21. This meant that for every MKR transaction that ended in a loss, 2.21 transactions saw profit.
Likewise, a Market Value to Realized Value (MVRV) ratio of 40.94% at press time meant that the token’s market value was 40.94% higher than the average price at which holders had acquired the asset. Hence, they held at a profit.