Due to low loan demand and few liquidations, MakerDAO, the governing body behind the decentralized lending protocol Maker, had an 86% decline in income in Q3 2022. The largest drop in income for the protocol came from ETH-based assets, down 74%. In addition, it saw a 66% fall in income from BTC-based assets and a 36% decrease from the rest of its assets.
The protocol saw its first net income loss since 2020, as the analyst predicted, due to a combination of falling revenue and rising costs. As if it was not bad enough, MakerDAO’s collateral ratio dropped to 1.1 in 2022 from 1.9 in 2021.
MakerDAO Revenue Drops Significantly
Just lately, MakerDAO has been trying to maximize the return it receives from its unused capital. Some have voiced concern that the community’s recent decision to invest $500 million in U.S. treasuries and corporate bonds runs counter to the protocol’s stated purpose of maximal decentralization.
According to DefiLlama, Maker has $7.83 billion in total value locked (TVL), making it the biggest decentralized financial system. CoinMarketCap reports that the price of MKR, the governance token of MakerDAO, has dropped to $918 from its all-time high of $6,339. And the protocol’s main stablecoin, DAI, ranks fourth overall. The fall in Maker’s income reflects a natural slowing of user activity during a down market, and Maker is the biggest decentralized finance system in terms of total value locked. The analyst also noted a decline in MakerDAO’s collateral ratio, which he or she estimates to be 1.1 as of the same time last year, down from 1.9.
Despite this, the analyst noted that “spending is not that elastic,” as the report revealed that quarterly expenses remained high at $13.5 million, down just 16% from the previous quarter.
