How has the veteran DeFi project MakerDAO regained its vitality?

Maker’s annualized profit has quietly tripled in the past three months.

Written by: Ouroboros Capital

Translated by: Luffy, Foresight News

The performance of MKR, the token of the veteran DeFi protocol Maker, has been impressive lately, but has anyone noticed that its annualized profit has quietly tripled in the past 3 months?

Although MKR’s performance is better than ordinary altcoins, its price growth is not significant enough compared to the three-fold increase in profit.

In other words, MKR’s P/E ratio has been significantly compressed.

The recent surge in Maker’s revenue is mainly due to the increase in stability fees (i.e. the fees charged to DAI borrowers) and the more efficient allocation of assets in the balance sheet to national bonds and investment-grade bonds, among other things.

The redistribution of assets in the balance sheet has produced initial results, and Maker’s fee income may continue to rise in the coming months. I don’t know why Token Terminal hasn’t noticed this yet, but someone must be paying attention.

Despite the long weekend in the United States, there were still $70 million in MKR spot trading on Binance over the past 3 days.

We have observed some new wallets accumulating MKR, possibly with large funds buying.

Another indicator we are closely watching is the market value of DAI, which will double MKR’s profitability. After the adjustment of stability fees and bond allocations, the profit of each unit of DAI for MKR is gradually increasing.

This can be simply compared to the fact that banks can increase profitability after interest rates rise. Although more interest is paid to depositors, the growth of loan interest income is greater. As net interest income (NIM) rises, so does profitability. Maker is taking these measures to pay higher savings rates to DAI holders, but the magnitude of its income increase is greater than the magnitude of its payments. Therefore, profitability has increased significantly.

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