Author: Wajahat Mughal, DeFi researcher; Translation: Golden Finance xiaozou
Maker DAO and Frax, the two DeFi giants, both focus on RWA (real world assets), which one is better? Maker or Frax?
This article will take you through the following:
Introduction to DAI and FRAX
· Support status
· Yield and income sources
· Income
· future development
Makers and FXS
· personal idea
1. Introduction to DAI and FRAX
Maker and Frax are the dominant forces in the DeFi field. What do they offer users? Maker launched the DAI stablecoin, an over-collateralized decentralized stablecoin. Frax launched the FRAX decentralized stablecoin and a series of financial products built around it.
2. Support
DAI support consists of ETH, stablecoins, and RWA, most of which are US Treasuries. FRAX support will change. Currently approaching 100% collateralization, so no more FXS support. Recently added sFRAX and the upcoming FXB (Bonds) will provide RWA support.
3. Rate of return and income sources
sFRAX has a 6.5% yield and a current supply of 41 million. sDAI has a 5% yield and the current supply is 1.73 billion. DAI has significant dominance in supply, but Frax currently leads in terms of yield.
MakerDAO sDAI's income comes from various RWA US short-term Treasury bond income. This can be seen from the custodian situation in the figure below. Frax sFRAX's income comes from the overnight interest account - IORB interest rate, which is held by FinresPBC, and then FinresPBC transfers the income to sFRAX.
4. Agreement income
Maker is currently one of the most profitable protocols in the DeFi space. Revenue exceeds $80 million. This is mainly due to the huge supply of Maker, which is always growing. FRAX has many sources of revenue, including T Bill (US Treasury Bills), AMO (Algorithmic Market Making Program), and of course ETH LSD (Liquidity Staking Derivatives) - currently $20 million per year.
5. Makers and FXS
MKR and FXS are both governance tokens. MKR — token buybacks in line with protocol revenue, market cap $1.3 billion. FXS — will receive revenue from the protocol (all efforts are currently being made to increase the collateralization ratio to 100%), market cap $450 million.
6. Future Development
Both are great protocols, Maker is still the king of cash, and Frax will continue to develop innovative products. Below I will briefly introduce the upgrades of these two protocols.
Maker - Endgame updates including token rebranding, removal of centralized stablecoins, launch of subDAOs, AI integration, and finally Makerchain. Frax - Frax Bonds, updates to the frxETH staking product and Fraxchain (a new Ethereum L2).
7. Personal thoughts
Personally, as I'm sure many of you know, I'm a huge Frax fan. I love the ecosystem and what they're building. However, I have to admire what Maker is doing. Like I said, Maker is the absolute king of asset cash flow. What do you think?