The Hidden Concerns of MakerDao, Not Just the Exposure of RWA

From Endgame to large purchases of national debt and RWA, to the founder’s high-profile buybacks on the secondary market, and the initiative to vote to significantly lower the threshold for withdrawing buyback funds from the treasury, a series of moves have given MKR’s market value a significant boost in the short term, but also left behind many potential risks. Mint Ventures research partner Alex Xu attempts to analyze the internal and external factors behind MKR’s rise and evaluate its strengths, challenges, and long-term risks based on Maker’s business.

Recent driving forces behind MKR’s rise include: 1) a decrease in monthly protocol expenses, with spending dropping from previously reaching 5-6 million USD to around 2 million in June; 2) the transition of collateral from interest-free stablecoins to government bonds or stablecoin financing, which significantly improved financial revenue expectations, reflected as a decrease in PE; 3) Founder Rune’s sale of other tokens such as LDO in the secondary market and continuous repurchasing of MKR for months, providing sufficient confidence to the market; 4) through governance, the threshold for repurchasing system surplus pool funds was reduced from 250 million to 50 million USD, with the surplus pool currently having approximately 20 million USD in repurchasing funds.

Can these positive factors push Maker to the next level? The author thinks it’s difficult. MakerDao’s core business has never changed, which is to generate “coinage tax revenue” by promoting its own stablecoin through stablecoin issuance and operation. The real challenges for MakerDao are: Issue 1) the continuous shrinkage of DAI’s scale, with long-term stagnation in the expansion of application scenarios; Issue 2) how to succeed in subDAO projects while bleeding MKR and DAI?

The hidden dangers left by this operation are: 1) insufficient retention of treasury surplus reserves, leading to a decreased ability to respond to bad debt risks; 2) a radical increase in RWA exposure, making the risk of assets being confiscated by centralized institutions greatly increased, further amplifying the fragility of DAI; 3) the massive and complex, continuously modified Endgame plan has led to severe community division.


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