MakerDAO’s $MKR Hits Near 3-Year High as Endgame Approaches

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KEY TAKEAWAYS

  • Two-decade-high US interest rates helped MakerDAO post record revenue and profits.
  • At the time of writing, MakerDAO offered 13% APR on DAI deposits.
  • On April 4, 2024, MKR hit $4,075, its highest since May 2021.
  • Nick van der Heiden, venture analyst of Hodl Funds, was cautious about MKR’s potential to eke out more gains following its over 400% increase over the last year.
  • MakerDAO’s Endgame will launch in the summer of 2024 and will introduce a new stablecoin and a new governance token.

Ethereum-based (ETH) stablecoin protocol MakerDAO saw its governance token MKR rise to a near three-year high of over $4,000 in early April 2024 after the protocol doubled down on its multi-collateralization strategy.

Maker (MKR) 1-Month Performance Chart. Source: CoinMarketCap
Maker (MKR) 1-Month Performance Chart. Source: CoinMarketCap

Currently, the MKR community is preparing to launch the first phase of its long-term strategy, Endgame, which will see a new stablecoin and new governance token introduced.

Are you interested in investing in MakerDAO? In this article, we study MKR’s 400% gains over the last year, analyze MKR’s potential to add to its gains and talk about MakerDAO’s long-term strategy, Endgame.

MakerDAO on the Rise: RWA Collateralization, Token Buyback & More

While the latest crypto bull market has certainly helped the majority of tokens rise with the tide, we look at MakerDAO-specific reasons behind MKR’s over 400% rise in the past year:

1. MakerDAO Increases Exposure to Real-World Assets (RWA)

As a part of its Endgame strategy, MakerDAO has doubled down on its strategy to diversify its DAI stablecoin collateral by adding US treasury bonds to its portfolio. According to makerburn.com, the total value locked of MakerDAO’s RWA collateral stood at $2.075 billion as of April 5, 2024.

The addition of US Treasury bonds to DAI’s collateral has helped fortify public confidence in the DAI stablecoin. The stablecoin industry experienced a difficult period of fear, uncertainty and doubt (FUD) following the collapse of the algorithmic stablecoin TerraUSD (UST) in May 2022.

2. Maker’s Revenue and Profit Hits All-Time High

The diversification into US Treasuries has not only made the DAI stablecoin less susceptible to crypto market events but has also boosted MakerDAO’s revenue due to over two-decade high US interest rate levels.

The extra revenue made from US Treasury yields helped the protocol post an all-time high annualized fee income of over $444 million and a record-high annual profit estimate of over $201 million in early March 2024, makerburn.com data showed.

Amid the influx of off-chain revenues, MakerDAO held on to its crown as the top ETH lending protocol in DeFi with a market share of 52% in January 2024, a report from Steakhouse Financials showed.

3. DAI Saving Rate (DSR) Increase

Aiding the growth in popularity of Maker’s DAI stablecoin was an increase to the DAI Savings Rate (DSR) from 1% APY to 8% APY in 2023. This Maker feature allows DAI holders to earn savings by locking up their DAI tokens.

Interest in Maker’s saving products saw massive capital inflows as DSR total value locked (TVL) surged over 73,000% in 2023 from about $2 million to $1.473 billion, data compiled on Dune Analytics showed.

In March 2024, DSR was further increased to 15% APY (later lowered to 13%), leading to 33.4% of DAI’s supply being utilized in saving features as of April 5, 2024, up from 8% in August 2023.

BA Labs, a Member of MakerDAO’s Stability Scope Advisory Council, wrote in a proposal:

“The DSR is an additional lever MakerDAO can utilize the DSR to make holding DAI more attractive, which in turn increases DAI demand, and ultimately alleviates the downward pressure of the DAI price.”

4. Token Buyback Program

A new Maker protocol feature that has helped support MKR prices since July 2023 is the introduction of a token buyback program called smart burn engine.

The smart burn engine is a smart contract system that uses excess DAI supply to buy MKR tokens from the Uniswap v2 DAI/MKR market. The contract will then pair the acquired MKR tokens with DAI and supply the pair to Uniswap v2’s DAI/MKR liquidity pool. The LP token is transferred to a protocol-owned address.

Makerburn.com data showed the program has bought back over 20,000 MKR tokens worth more than $75 million, as of April 5, 2024.

Expert MKR Price Analysis With Nick Van Der Heiden

Positive MakerDAO developments have coupled with bullish crypto market sentiment to help the MKR token post a one-year gain of 450% from $719 to $3,757, as of April 5, 2024.

On April 4, 2024, MKR hit $4,075, its highest since May 2021.

Techopedia asked Nick van der Heiden, venture analyst of Rotterdam-based digital assets investment funds Hodl Funds, if he was bullish on MKR, to which he replied:

“I like MKR as a protocol for sure. However, the question on to be bullish or not to be bullish is a little more for interpretation, right? Basically, we’ve been going up over a year now, with no real corrections.”

Maker (MKR) Technical Analysis Source: TradingView
Maker (MKR) Technical Analysis Source: TradingView

Heiden added:

“But to be fair, I wouldn’t long this at all. Time to long was in the green box (as shown in the chart above)… As a trader, I’d say this is a no-trading zone. However, if you’re bullish on the space, MKR DAO is a fundamentally good project.”

Looking Forward: Maker’s Endgame & Standalone L1

Maker’s community has approved a proposal called Endgame to transform the protocol. According to MakerDAO co-founder Rune Christensen, MakerDAO’s Endgame will launch in the summer of 2024.

The first phase of Endgame will see MakerDAO rebrand its ecosystem to be “designed for simplicity and user adoption.”

A new stablecoin and a new governance token will be launched. Existing DAI and MKR holders will have the option to upgrade to the new tokens. MKR holders will receive new governance holders at a ratio of 1:24,000.

Maker’s ecosystem will comprise four initial subDAOs, which are “specialized, independent community, deeply tied to the Maker Ecosystem, but with autonomy and unique business models.”

According to Christensen, the four initial subDAOs are:

  • SakuraDAO – a community-focused yield ecosystem.
  • SparkDAO – a technology-focused DeFi ecosystem powered by Maker products.
  • Quant – RWA-focused ecosystem for tokenized assets, market making, etc.
  • Qual – RWA and finance ecosystem focused on Southeast Asia and China.

The final phase of Maker’s Endgame strategy looks to create a standalone L1 blockchain for MakerDAO and its subDAOs. Christensen said the final phase of Endgame will “likely take at least 3 years, if not longer.”

The Bottom Line

MakerDAO is well-respected and one of the biggest DeFi projects in the world. It not only weathered the stablecoin FUD of 2022 but came out stronger due to its focus on collateralization and transparency.

Always do your own research before investing. Cryptocurrencies are high-risk assets. The information in this guide does not constitute investment advice and is meant for informational purposes only.

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