Maker is a money printing machine
MakerDAO Deep Dive
MakerDAO is a revenue generating machine.
Regardless of market conditions, it continues to print money.
With some upcoming bullish catalysts, it doesn't look like slowing down any time soon.
Here's my November 2023 research report on MKR.
Here's what we'll cover in today's edition:
Overview
Use Case
Adoption
Revenue
Tokenomics
Treasury
Governance
Team & Investors
Competitors
Risks & Audits
Summary
The Maker Protocol enables users to obtain loans by using their crypto assets as collateral.
Here's how it works:
Deposit collateral (Approved ERC tokens)
Mint the stablecoin $DAI
$DAI is currently the largest decentralized stablecoin, with a soft peg to the USD.
Use cases include:
Financial independence
Self-Sovereign Money Generation
Savings Earned Automatically (DSR)
Fast, Low-cost Remittances
Stability in Volatile Markets
DAI can also be used to pay for gas in the Ethereum ecosystem- improving onboarding experience.
The TVL currently stands at $8.3b, having remained in a tight range of $7-8b since June 2022.
The release of RWAs on Maker has provided a significant boost to the overall TVL in recent months. The current breakdown of TVL is as follows:
MakerDAO: $5.7b
Maker RWAs: $2.6b
In the last 30d, MKR has generated $15.7m in revenue.
When annualized, this amounts to an impressive $191m.
Making it the 3rd highest among all protocols (DefiLlama).
The fees and revenue are primarily generated through the interest paid by borrowers on the platform.
The $MKR token serves two primary purposes:
Governance
Recapitalization resource
In addition to its governance role, MKR can also be utilized for system recapitalization.
If the system debt exceeds the surplus, the MKR token supply may expand through a Debt Auction.
As a result, this risk encourages MKR holders to align themselves and responsibly govern the @MakerDAO ecosystem in order to mitigate excessive risk-taking.
This also implies that the supply of MKR may fluctuate based on debt capitalization.
These are the current supply stats:
Circulating supply = 901k
Total supply = 977k
Max supply = 1m
Market cap = $1.28b
FDV = $1.39b
Market cap/ FDV = 0.92
The @MakerDAO Treasury consists of:
$62.55m in stablecoins
$0.98m in BTC/ETH
$131.77m in their own token (MKR)
In total, the treasury holds a healthy $194.77m (including their own token).
Placing them in 14th position according to DefiLlama.
Anyone can submit a proposal for a vote, but only $MKR holders have the power to vote on changes to the Maker Protocol.
The process consists of two stages:
Proposal polling
Executive Voting
Ensuring careful consideration before being subjected to a final vote.
In 2014, MakerDAO was launched on the Ethereum blockchain and has since become one of the largest decentralized finance (DeFi) applications.
The protocol was co-founded by Rune Christensen (@RuneKek) and Nikolai Mushegian.
$DAI is now one of the most widely used stablecoins.
Over multiple secondary token sales, Maker has raised around $54.5m.
$12M on 16 Dec 2017, funded by Andreessen Horowitz and Polychain Capital
$15M on 23 April 2019, funded by a16z Crypto
$27.5M inn April 2019, funded by Paradigm & Dragonfly Capital
MakerDAO has established itself as the the clear market leader in the Collateralized Debt Position (CDP) category.
It now faces competition from protocols like Liquity and Lybra Finance.
Other established DeFi players (Curve & AAVE) have also recently launched stablecoins.
The Maker protocol has been audited by several reputable firms including:
Trail of Bits (Security review of smart contracts)
PeckShield (Traditional audit)
Runtime Verification (Model used to verify the logic of system)
Overall, I am quite bullish on MakerDAO and the DAI ecosystem.
There are a number of upcoming bullish catalysts:
Launch of Sub DAOs
Spark Protocol
RWA narrative
5% APY on DSR
11% APY on Gnosis Agave
Token split
Rebranding
Overall weighted score = 8.85
Note: I am NOT an ambassador or advisor of MakerDAO. This is NFA.
Awesome man ... really good stuff. Please keep this up.