Meet Your Maker

Key Insights

• Despite the instability experienced by many other stablecoins in the last year, Maker's DAI has struggled to increase its market share, currently holding just 3% of all stablecoins. This is attributable to lower capital efficiency in the minting of DAI compared to centralized stablecoins.
• Maker is distinguishing itself by sharing yield with holders; it increased the DAI savings rate (DSR) to 3.19%, which led to a threefold increase in DAI deposits within 35 days. This might drive user adoption, especially for those holding their assets in stablecoins and seeking onchain yield.
• Maker's adoption of Ethereum-based liquid staking tokens (LSTs) as collateral has significantly improved its capital efficiency. LSTs generate yields even when locked in smart contracts, thereby driving capital efficiency beyond 100%.
• Spark Protocol, launched in May 2023 as Maker's first spin-off and proprietary front end, provides DAI liquidity at a fixed rate equivalent to the DSR. This move has the potential to increase organic adoption and boost the protocol's functionality.
• Maker's financial health has also strengthened significantly in the past year, with annualized revenue expectations quadrupling from $35 million to $135 million and annualized net profits also increasing fourfold to $107 million.

Stablecoins have had a rather unstable year. It all started with the spectacular $20 billion blowup of TerraUSD (UST) in May 2022. Since then, there have been a few unfortunate events, although not quite as catastrophic.