Maker’s 8% Stablecoin Yields Re-spark DeFi

DAI savings rate attracts $1B in deposits

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This week we dive into one of DeFi’s original protocols: MakerDAO. We analyze its recent improvement, attracting nearly $1B in less than a week. We cover growth in its DAI stablecoin, patterns of accumulation on MKR and potential secondary effects likely to act as tailwinds for crypto.

Network Fees — Sum of total fees spent to use a particular blockchain. This tracks the willingness to spend and demand to use Bitcoin or Ether

• Bitcoin network fees climbed by 24.5% without a clear indication of the drivers
• Ethereum fees dropped by 21.2%, reaching a two month low as volatility stagnates

Exchanges Netflows — The net amount of inflows minus outflows of a specific crypto-asset going in/out of centralized exchanges

• Both Bitcoin and Ether recorded around $50M in net outflows from CEXs, suggesting modest activity

Maker’s 8% Stablecoin Yields Re-spark DeFi

The first lending protocol, MakerDAO, has caught the attention of the crypto space with its recent move. Its stablecoin, DAI, is able to earn the DAI savings rate (DSR), which as of this past Sunday was increased to 8%. This yield is funded by Maker’s revenues, most which stem from supplying part of its collateral into US treasuries. This shift is already causing an impact on Maker and is likely to extend beyond the protocol.

Source: MakerBurn DSR

RWA Yields On-Chain — Real world assets such as treasuries are bringing renewed interest into DeFi

• The amount of DAI earning the DAI Savings rate climbed by nearly $1B this week
• DAI supply has increased almost as much ($800M), and is currently at a three month high
• The DSR’s increment solidifies the trend of real-world assets in DeFi, where other protocols like Ondo Finance have already made strides with $164M in deposits in their tokenized treasuries

Source: ITB DAI Transaction Indicators

DAI Resurgence — The original decentralized stablecoin is seeing increased activity

• DAI volume hit its highest since the Silicon Valley Bank collapse, which had brought panic as part of USDC’s collateral was held there
• The option to earn yield on top one of the bluechip stablecoin is beginning to have positive ripple effects across DeFi
• Aave has a proposal to list sDAI (DAI earning the DAI savings rate) as collateral, which would indirectly allow users to take leverage against treasuries on-chain

Source: ITB MKR Ownership Indicators

MKR Accumulation — Maker’s governance token has more than doubled in price in the past three months

• Large MKR holders have seen significant inflows, suggesting strong buying activity
• The spike in in Large Holders Netflows in July 16 appears to have been linked with Maker’s founder Rune, who has acquired $24M in MKR tokens over the past year
• MKR has been one of the best performing tokens over the past month, increasing by 35%

While the recent price move in MKR may be overheated, the implications of having the DSR at competitive rates are likely just beginning. Even if the DSR drops to 5% to match treasuries, it opens the opportunity for other lending protocols and DEXs to use a sustainable yield-generating stablecoin as a building block. It also makes it easier for people who would have not otherwise bought treasuries to simply access their yields. Overall, the DAI savings rate is likely to play an increasingly important role in DeFi and crypto altogether as it helps attract back capital and bring in new users.