Data from DeFiLlama on May 31 showed that MakerDAO, a decentralized money market on Ethereum for users to borrow and lend assets including ETH, spends $27.66 million a year to keep the protocol running.

This money is used to cover expenses, such as taking care of the 97 people responsible for maintaining the lending protocol and ensuring that the code runs smoothly without any problems.

MakerDAO’s expenses are huge

As of May 31, MakerDAO has spent just over $10.6 million in fees on DAI in 2023 alone. DAI is an algorithmic stablecoin minted and managed by MakerDAO that tracks the value of the U.S. dollar.

DAI chart May 31 | Source: DAIUSDT on OKX, Trading View

It differs from other popular fiat-pegged stablecoins, such as USDT or BUSD, which are minted by a centralized entity and require that every token in circulation is backed by an equal amount of fiat currency (primarily USD).

So far, $10.6 million DAI has been spent. Of this, 2,048,873 DAI has been allocated to protocol engineering, and 15% of total spending is allocated to sustainable ecosystem expansion.

385,875 DAI has been used for strategic finance, 537,448 DAI for growth, 811,704 DAI for oracles, and 903,459 DAI for development and user interface improvements.

Employees receive compensation and other benefits from funds allocated to the protocol engineering department. The current monthly budget is 624,165 DAI and is expected to drop to 475,089.13 DAI.

Specifically, MakerDAO approved 396,895.13 DAI per month for employee salaries and benefits, with travel and other entertainment activities consuming only 2,072 DAI.

However, in addition to employee salaries and additional benefits payments, the DAO approved 75,250 DAI as payment for professional services.

The Protocol Engineering department does not work with external auditors. For the sake of transparency, they must submit a monthly fee report for evaluation and approval by the MakerDAO community.

Under “Development and User Interface,” software expenses increased significantly, exceeding forecasted amounts. In the last month, MakerDAO spent 8,635.78 DAI to keep its servers running on Amazon Web Services, exceeding budget by 2,976.68 DAI.

LidoDAO requires $16.81 million per year

The funds used to keep MakerDAO running are about $10 million more than what is needed to keep Aave and Lido running. The data shows that Aave and Lido require $19.2 million and $16.81 million in operating funds respectively.

The difference may be due to employee headcount, as MakerDAO has 97 recognized employees, while Lido has 83. Aave employee headcount remains confidential.

Nonetheless, Lido, a staking liquidity protocol, is the largest DeFi protocol by total value locked (TVL). As of May 31, LidoDAO’s TVL was $13.13 billion, double that of MakerDAO and nearly three times Aave’s $5.33 billion TVL.