MakerDAO revenue drops 86% due to falling loan demand

What’s new? The revenue of MakerDAO, a decentralized autonomous organization, fell to $4 million in Q3 2022. According to a Messari analyst known under the pseudonym Johnny_TVL, the project’s revenue dropped by 86%, from $30 million in the previous reporting period. As a result, Maker received its first quarterly loss since 2020. The expert cited a fall in loan demand and several major liquidations as the reasons.

@MakerDAO third quarter was a painful one for the decentralized lender. Notables: - revs fell 86%, collateral ratio down to 1.1- G-UNI dominating, is this increasing liquidity and on-chain volumes for DAI? - wBTC reliance on whales/institutions- RWAs - Endgame🧵1/n pic.twitter.com/OrJ7JvFSM3— Johnny_TVL (@john_tv_locke) October 13, 2022

What else did the analyst write? Johnny_TVL reported that Maker’s revenue from ETH-based assets fell by 74%, from BTC-based assets fell by 66%, and from others fell by 36%. These assets are used by borrowers as collateral for loans in the DAI stablecoins.

The expert also noted the uptake of Gelato Uniswap (G-UNI) tokens used in the DAI/USDC liquidity pool. He believes that this brings almost no revenue to the project, but increases its reliance on the USD Coin (USDC) stablecoin. This may affect the liquidity and usage of DAI. Despite this, the volume of transactions with DAI increased by 57% and 149% in the last two quarters.

According to the expert, wrapped bitcoin (wBTC) lending market share was volatile as Maker’s dependence on borrowing from large holders and institutional investors has increased recently. As an example, Johnny_TVL cited the situation with FTX crypto exchange CEO Sam Bankman-Fried’s company, Alameda Research. At the beginning of the quarter, the firm had 63 000 wBTC locked in Maker. It liquidated 13 000 wBTC in July. By the end of the quarter, the position was less than 15 000 wBTC.

At the same time, the expert highlighted the growth in real world asset (RWA) backed loans, which now account for 12% of the company’s total revenue. The project made its largest RWA-backed loan to Huntingdon Valley Bank (HVB) in Q3.

Earlier, Maker reported plans to move $500 million in reservesinto short-term US Treasury bonds. In addition, the project’s co-founder Rune Christensen suggested the community depeg the DAI stablecoin from the dollar.

What is known about MakerDAO? It is a protocol based on the Ethereum blockchain that uses the DAI algorithmic stablecoin. The asset ranks 13th in the cryptocurrency ranking with a market capitalization of $6 billion. Maker, a decentralized trading platform, provides lending and borrowing services for cryptocurrencies. As of October 14, 12:00 UTC, the native token MKR is trading at $909, having gained 0,78% per day, according to Binance.