Token Terminal data: MakerDAO's revenue in the second quarter of 2024 will reach US$85 million

This site (120bTC.coM): According to data from Token Terminal, the revenue of MakerDAO in the second quarter of 2024 reached a new high, reaching a staggering US$85 million. Since December 2017, MakerDAO has issued and managed the over-collateralized stablecoin DAI, designed to be pegged 1:1 to the U.S. dollar. It is currently the fourth largest stablecoin with a circulating supply of $5.1 billion.

MakerDAO’s main business: creating stable currency DAI

MakerDAO is a decentralized autonomous organization running on the Ethereum blockchain to issue DAI (USD stable currency). The DAI stablecoin is generated through over-collateralized lending, and its mechanism mainly involves the following steps:

• Collateral assets: Users deposit encrypted assets (such as ETH, WBTC, etc.) into MakerDAO's smart contract as collateral.

• Generate DAI: The smart contract allows users to generate a certain amount of DAI based on the value of the collateral and a preset mortgage rate (usually higher than 150%). For example, if a user stakes $150 worth of ETH, only 100 DAI may be generated.

• Stability fee: Users need to pay a stability fee when generating DAI, which will be adjusted based on market conditions and governance votes. Stability fees are one of MakerDAO’s main sources of income.

• DAI circulation: The generated DAI can be traded on decentralized exchanges, used in DeFi protocols, or directly used for payments.

• Repayment and Redemption: Users can repay DAI at any time and pay the corresponding stability fee. When the user repays all DAI, the previously pledged crypto assets can be redeemed.

• Liquidation: If the value of the collateral drops, causing the collateral ratio to fall below the minimum requirement, the system will automatically trigger liquidation. Upon liquidation, a portion of the collateral will be sold to repay DAI and pay liquidation penalties.

Although DAI only accounts for a small amount of market capitalization in the stablecoin market, it is still the largest decentralized stablecoin. As of July 5, 2024, the top five stablecoins in the cryptocurrency market and their market shares are as follows.

• Tether(USDT): 70.02%

• USD Coin(USDC): 21.13%

• DAI: 3.3%

• Ethena USDe(USDE): 2.29%

• First Digital USD (FDUSD): 1.25%

MakerDAO’s source of income

• Stability Fee (Stability Fee): When users generate DAI by staking crypto assets, they need to pay a certain stability fee. This fee will be adjusted based on market conditions and governance votes, and is MakerDAO’s main source of income.

• DAI Savings Rate (DSR): DAI holders can deposit DAI into the DSR contract and earn interest. The source of interest is the system's stability fee income, and the interest rate of DSR is determined by governance voting.

• Liquidation Penalty: When the value of the collateral drops to a certain level, the system will automatically liquidate the collateral to ensure the stability of the value of DAI. When liquidating, the borrower needs to pay a certain penalty, which is also one of MakerDAO's income.

• Investment income: MakerDAO may use part of the funds to invest in low-risk assets, such as US Treasury bonds or other stable coins, to obtain additional income.

Decisive proposal: MakerDAO reinvests in U.S. Treasury bonds and corporate bonds

Last year’s governance proposal allowed MakerDAO to still reach US$85 million in revenue when the market faced a retracement in the second quarter of this year.

With past experience, The DAO, the MakerDAO governance forum, passed a new proposal last week to invest US$500 million worth of stablecoin DAI in US Treasury bonds and corporate bonds.

The proposal mentions that 80% of the funds will be allocated to U.S. short-term Treasury bonds, and 20% will be allocated to investment-grade corporate bonds to obtain interest income.

TJ Ragsdale, head of asset management at MakerDAO, said "Income from the real world can offset some of the income we lose from cryptocurrencies."

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