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Assessing MakerDAO’s [MKR] health following its displacement by Lido

Assessing MakerDAO’s [MKR] health following its displacement by Lido
  • MakerDAO had a system surplus at press time, indicating that the entire debt owed was no more than the worth of the collateral within the system
  • Its displacement by Lido is perhaps momentary as a consequence of its slipping grip on the ETH staking market

Main decentralized finance protocol (DeFi) MakerDao [MKR] provided customers with an summary of its present state in 2023. The DeFi protocol took to Twitter on 2 January to highlighted the quantity of DAI tokens it had in circulation and its complete worth locked (TVL).

The tweet additionally highlighted MakerDAO’s collateralization ratio and the variety of DAI tokens it held as System Surplus till the tweet went stay. 


Learn MakerDAO’s [MKR] Value Prediction 2023-2024


Based on MakerDAO, the present circulating provide of its DAI stablecoin was 5.7 billion. This put it 4 locations behind different stablecoins, together with Tether [USDT], USD Coin [USDC], and Binance USD [BUSD], information from CoinMarketCap revealed

Supply: CoinMarketCap

MakerDAO additionally confirmed that its present collateralization ratio stood at 141%. Collateralization ratio refers back to the quantity of collateral {that a} borrower has pledged to safe a mortgage.

Within the context of MakerDAO, the collateralization ratio represents the worth of the collateral (normally ETH, BAT, and USDC) relative to the worth of the debt (DAI).

Because of this the worth of the collateral should be no less than 141% of the worth of the debt. This excessive collateralization requirement is in place to guard the system’s stability and make sure that debtors have adequate collateral to cowl their money owed. 

Additional, MakerDAO said that it held 74.9 million DAI in its System Surplus till the time of the tweet. The system surplus is a crucial measure of the general well being and stability of the MakerDAO system.

A surplus signifies that the system is ready to stand up to shocks or declines within the worth of the collateral because it measures the distinction between the worth of the collateral within the system and the entire debt owed.

MakerDAO dethroned by Lido, however for a way lengthy?

In the course of the intraday buying and selling session on 2 January, the TVL of main liquid ETH staking platform Lido Finance exceeded that of MakerDAO. Thus, Lido managed to displace Maker because the DeFi protocol with the very best TVL. 

Until the time of press, MakerDAO’s TVL was noticed at $5.92 billion, in second place behind Lido’s $5.97 billion. 

Supply: DefiLlama

Based on information from Dune Analytics, as extra choices for staking Ether grow to be out there, Lido Finance’s place as a pacesetter available in the market could also be in danger. 

Lido’s market share within the ETH staking ecosystem decreased barely in the beginning of the 2023 buying and selling yr. This was pegged at 29% at press time and had been persistently declining since Could 2022.


Are your MKR holdings flashing inexperienced? Examine the revenue calculator


With a persistent decline in Lido’s share of the ETH staking market, a corresponding fall in its TVL because the yr progresses would possibly result in MakerDAO’s return to its preliminary spot. 

Supply: Dune Analytics



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