MakerDAO set to implement parameter changes; a look at lending markets

• MakerDAO has a new proposal to implement some parameter changes.
• The protocol has displaced Lido to regain its position as the leading DeFi protocol.

In a new proposal, the Open Market Committee of the MakerDAO governance team is seeking community approval to implement some parameter changes to the operation of the decentralized finance protocol (DeFi) in light of recent events in the lending vertical of the DeFi ecosystem. 

Read MakerDAO’s [MKR] Price Prediction 2023-2024

According to the proposal, due to the general decline in liquidity for smaller assets and Avi Eisenberg’s market manipulations that led to the siphoning of $114 million out of decentralized crypto exchange (DEX) Mango Markets, fewer long-tail assets are now accepted as collateral in the crypto lending world. 

Long-tail assets are cryptocurrencies that have been in circulation for several months or years but have low or no trading volume. Rather than discarding these crypto assets, DeFi protocols float pools using them, thereby generating liquidity into this category of assets. 

Per the new proposal, MakerDAO’s Aave-DAI Direct Deposit Module (Aave D3M) is being proposed to be reactivated with a limited debt ceiling, and the Compound v2 D3M debt ceiling would be increased. 

Stability fees for the protocol’s WSTETH-B vault type would also be normalized. Additionally, fees on the USDP PSM would be raised to prevent an increase in exposure.

According to the Open Market Committee, if implemented, these changes are expected to result in an annual revenue increase of approximately 525,000 DAI and an increase in COMP rewards for the Maker treasury from the Compound D3M.

MakerDAO regains position as the DeFi king

Lido Finance, a top liquid ETH staking platform, briefly overtook MakerDAO as the DeFi protocol with the highest total value locked (TVL) at the start of the year. In the last week, this caused a significant increase in the value of Lido’s governance token LDO.

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However, as of this writing, per data from DeFiLlama, Maker has regained its position as the leading DeFi protocol with a TVL of $6.27 billion.  So far this year, MakerDAO’s TVL has grown by 4%. 

Source: DeFiLlama

The protocol’s governance token MKR has also recorded some growth in its price. Exchanging hands at $558.98 at press time, its value has gone up by 10% since the beginning of the year, data from CoinMarketCap revealed.

The price growth is attributable to a steady rise in MKR accumulation since the year started. An assessment of MKR’s price movements on a daily chart revealed that the alt’s Relative Strength Index (RSI) and Money Flow Index (MFI) have been in an uptrend since 3 January.

At press time, they were spotted above their neutral lines at 53.29 and 61.15 respectively. 

Source: TradingView