MakerDAO price rebounds as DAI holds its peg and investors search for stablecoin security

The cryptocurrency market has had a difficult few weeks. The Bitcoin (BTC), price is not near what analysts expect, several stablecoins have lost their pegs and the collapse of one of the largest decentralized finance (DeFi), platforms led to $900 billion disappearing from crypto market capitalization.

MakerDAO (MKR), a decentralized stablecoin, managed to make the most of the crisis and collapse of TerraUSD.

Data from TradingView and Cointelegraph Markets Pro shows that the price collapse of Terra (LUNA), accelerated from May 9, to May 12, MKR climbed 66.2%, from a low at $952 on May 12, to its current value $1,587.

MKR/USDT 1-day chart. Source: TradingView

The MKR’s momentum reversal could be due to DAI holding its position during recent market turmoil, MakerDAO vault financing supply chain shipments and adding staked Ether (ETH), as collateral to mint DAI.

DAI holds steady during strong market turbulence

Investors have more confidence in MakerDAO because DAI kept its dollar peg despite a volatile market where a few stablecoins lost their pegs.

DAI demand has fallen 25% over the last few days, but the Peg Stability modules have kept the peg solid. DAI holders can have peace of mind by putting DAI demand into the PSMs in the bull market.
— hexonaut.eth @ Permissionless – May 12, 2022

The price of DAI fluctuated between $0.9961 and $1.0046 during the peak of volatility. It is currently priced at $0.9994.

DAI remained steady in spite of a decrease in supply of more than 2.25 billion DAI could have given investors more faith, especially after Tether’s price dropped to $0.974.

Real-world adoption continues

MKR’s growing acceptance in the real world is another factor that has helped it gain momentum. The MakerDAO vault was recently used to finance an Australian beef shipment. Additional “use cases” are in the works.

A Maker Vault was used for financing a shipment from Brisbane to Hong Kong of Australian Beef. The entire operation is being traced using @Mastercard Provenance which provides a blockchain-based traceability solution. This is how it was possible
— Maker (@MakerDAO May 10, 2022

A MakerDAO vault was used in conjunction with Centrifuge, a decentralized asset financing protocol. This allowed ConsolFreight, the trade finance provider ConsolFreight, to mint DAI to finance the transaction.

To track the transaction and keep track of it, a nonfungible token (NFT), was also created. Provenance, Mastercard’s blockchain traceability solution, is used to track the shipment.

This transaction demonstrated one application of stablecoins and smart contracts in the supply chain industry.

Staked Ether is collateral

MakerDAO’s momentum is also being boosted by the inclusion of support for staked Ether on the protocol as collateral.

Participants in the Ethereum BNB Chain stake can gain access to funds that would otherwise be locked up for an unknown time. They can then use them earning a DeFi yield.

According to data from Defi Llama, MakerDAO is now the highest-ranked DeFi protocol in terms of total value locked (TVL) because of the collapse of UST and its knock-on effects.

Top-5 Protocols by Total Value Locked. Source: Defi Llama

MakerDAO claims the top spot after Curve’s TVL fell from $19.32 Billion on May 5th to $8.71 Billion on May 16th.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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