ETH DeFi Leader Coin MakerDAO Dropped By 55%: Analysis

The ETH DeFi leader coin MakerDAO dropped by 55% from the start of 2020 as per the latest reports that we have in our Maker news today.

Ethereum’s decentralized finance sector went through a parabolic growth over the past few months as the value of the coins locked in the protocols surged to a cumulative $4.25 billion for the first time. In the past few months, the value of DeFi coins went parabolic and Chainlink and Synthetix Network Token increased by 100 percent against BTC and the dollar. The growth of the ETH space not aided MakerDAO, as well as the coin protocol, got down by 55% against ETH according to an analyst.

The ETH DeFi leader coin MakerDao has been the flagship protocol from the entire industry. It offers the popular DAI stablecoin and a platform for one to obtain decentralized loans and the protocol now has about $1 billion of cryptocurrency. This makes it the most important protocol out there since it offers the stablecoin that underlines a lot of applications.

Despite MAkerDAO’s importance and growth, the native MKR has not performed well against ETH in the past year as the crypto researcher Hasu commented on the asset’s performance:

“whoa, MKR is down 55% vs ETH this year, even as ETH has been outperformed by many DeFi tokens. seems like a rising tide does not float all boats. at the same time, the supply of Dai has increased from ~70m to ~360m. does someone keep track of MKR revenue via burn?”

MKR’s underperformance is a byproduct of the collapse of the earnings as Hasu speculated:

“I found annualized MKR earnings. they did indeed fall of a cliff in the last year, crazy if you consider how much smaller Dai supply was mid-2019. the explanation is probably that Dai has traded consistently above $1 this year and so stability fees are zero… this also means IF Maker ever successfully implements negative rates, revenue to MKR holders is probably going to surge to entirely new levels, now that supply is 4x higher than mid-2019.”

Maker is now trading for $604 and the crypto has now a market cap of around $600 million. Some believe however that MKR is undervalued because it’s the backbone of DeFi and one analyst even found earlier that the ETH-based asset could be overvalued. The team from the company AlfaBlok found that MKR’s value reached $350 million implies a huge growth rates of more than 70%.