MakerDAO revenue tumbles 86% on Ether and Wrapped BTC woes

MakerDAO, which is the governing body for the Maker Protocol, has seen its revenue drop in the third quarter 2022 due to a decrease in loan demand and fewer liquidations while expenses remain high.

Johnny_TVL (a Messari analyst, coauthor of “The State of Maker Q3 202022”) tweeted that the revenue of the autonomous decentralized organization fell to just over $4M in Q3 – 86% lower than the quarter before.

MakerDAO’s first quarter in 2020 of net income loss was one of the outcomes.

MakerDAO value statement as at September 30, 2022. Source: Messari

According to Messari’s senior research analyst, the reason for the decline in revenue was due to a lack of liquidations and low loan demand.

The two largest earners of Ether (ETH), and Wrapped Bitcoin(wBTC) have struggled in the past quarter. Revenue from ETH-based assets fell 74%, while revenue from BTC assets fell 66%.

These cryptocurrencies are used by borrowers to secure loans of the Dai stablecoin (DAI), providing security against volatility in cryptocurrency markets and the interest that is paid on them.

Collateral token to make quarterly revenues Source: Messari

An analyst also noted a decrease in MakerDAO’s collateral ratio, suggesting that the ratio has dropped to 1.1 from the 1.9 it was last year.

The analyst said that “expenses were not so elastic”, with the report showing that expenses remained high at $13.5million in the quarter, which is only 16% less than the previous quarter.

Related: Nexo-labeled Address Withdraws $153M in Wrapped BTC From MakerDAO

MakerDAO recently took steps to improve the return on collateral it has, and proposed to invest $500 million in bonds and treasuries. MakerDAO believes that this will give the protocol a low-risk, additional yield.

MakerDAO’s growth in Real World Asset (RWA-backed loans) was another positive. It successfully launched its largest RWA-backed loan to Huntingdon Valley Bank in the third quarter 2022.

This loan involved the creation of a vault containing 100 million Dai. It is a new collateral type within the Maker Protocol that can help it generate additional revenue via vault stability fees associated maintaining the vault and minting DAI.

HVB can still benefit from the integration because it allows the bank effectively to increase its legal lending limit. MakerDAO hopes that other banks will follow HVB if everything goes well.

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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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