By Jake Pahor

Compiled by: Frank, Foresight News

MakerDAO is a revenue-generating machine that continually continues to print money to create wealth regardless of market conditions.

This article is the latest research report on MKR in October 2023.

The Maker Protocol enables users to obtain loans by using their crypto assets as collateral. Here’s how it works:

  1. Users deposit collateral (approved ERC tokens);

  2. Mint stablecoin DAI according to the collateral ratio;

DAI is currently the largest decentralized stablecoin, pegged to the US dollar.

Use cases for DAI include:

  • Decentralization ensures financial independence;

  • Users can generate currency independently;

  • Automatic Savings Revenue (DSR);

  • Fast, low-cost remittances;

  • Remain stable in volatile markets;

In addition, DAI can also be used to pay gas fees in the Ethereum ecosystem in certain scenarios to improve the Web3 entry experience for new Web3 users.

MakerDAO’s TVL is currently $4.5 billion, its lowest level since January 2021 and down 78% from its all-time high in December 2021.

Despite this worrying downward trend, MakerDAO still holds the fourth spot among all DeFi protocols (total TVL).

In the past 30 days, MKR has generated $10.7 million in revenue. If annualized, this figure is as high as $130.7 million, making it the seventh-highest protocol.

MakerDAO’s fees and revenue are primarily generated through interest paid by borrowers on the platform.

The MKR token has two main uses:

  • Governance;

  • recapitalization resources;

In addition to its governance role, MKR can also be used for system recapitalization.

That is, if the debt of the Maker system exceeds the surplus, the MKR token supply may be expanded through debt auctions.

Therefore, this risk encourages MKR holders to self-regulate and responsibly manage the MakerDAO ecosystem to mitigate instances of excessive risk-taking.

This also means that the supply of MKR may fluctuate based on debt capitalization.

These are the current supply statistics:

  • Circulating supply = 901,000 MKR;

  • Total supply = 977,000 MKR;

  • Maximum supply = 1 million MKR;

  • Market capitalization = $1.27 billion;

  • FDV = $1.4 billion;

  • Market value / FDV = 0.9;

The crypto assets in the MakerDAO vault include:

  • $49.61 million in stablecoins;

  • $800,000 in BTC and ETH;

  • $122.38 million worth of the native MKR token;

That means the MakerDAO treasury holds a total of $172.39 million (including the native token MKR), which ranks 11th among all protocols according to DefiLlama data.

At the community governance level, anyone can submit proposals to MakerDAO for voting, but only MKR holders have the right to vote on changes to the Maker Protocol.

The process consists of two stages:

  • Proposal Voting

  • Executive Voting

These two steps ensure that MakerDAO carefully considers before taking a final vote.

MakerDAO was launched on the Ethereum blockchain in 2014 and has since become one of the largest DeFi applications. The protocol was co-founded by Rune Christensen and Nikolai Mushegian.

DAI is now also one of the most widely used stablecoins.

In total, Maker raised approximately $54.5 million in token sales:

  • On December 16, 2017, it raised $12 million, with Andreessen Horowitz and Polychain Capital participating in the investment;

  • On April 23, 2019, it raised $15 million, funded by a16z Crypto;

  • In April 2019, it raised $27.5 million, with participation from Paradigm and Dragonfly Capital;

MakerDAO has emerged as the clear market leader in the collateralized debt position (CDP) category, though it now faces competition from emerging protocols such as Liquity and Lybra Finance.

At the same time, in terms of stablecoin competition, other mature DeFi participants such as Curve and AAVE have also launched stablecoins such as crvUSD and GHO.

In terms of security audit of the protocol, Maker has completed security audits by several well-known auditing companies, including:

  • Trail of Bits (security review of smart contracts);

  • PeckShield (traditional auditing);

  • Runtime Verification (a model used to verify system logic);

Overall, I am very bullish on MakerDAO and the DAI ecosystem, here are some of the positives that are coming:

  1. The launch of Sub DAOs;

  2. Spark Protocol；

  3. RWA Narrative;

  4. 5% APY on DSR;

  5. Token splits;

  6. Rebranding;