Tech

MakerDAO treasury reserves overtake Lido, but what’s stopping its ascent

05/20/2023
Bitcoin Ethereum News


  • MakerDAO’s treasury reserves overtook Lido and other protocols.
  • However, Lido continued to outperform MakerDAO in other areas.

Over the last few months, MakerDAO lost the top position in terms of TVL to the Lido [LDO] protocol. With the launch of the Shanghai Upgrade and the subsequent rise of interest in staking, Lido has been seeing even more growth.

Realistic or not, here’s MKR market cap in BTC’s terms

Hidden treasures

Despite this, the treasury earnings of MakerDAO surpassed that of Lido. According to DeFi Llama, the overall treasury earnings of MakerDAO, excluding their own tokens, were $70.33 million at press time. The Lido protocol has not procured the same number of holdings in its treasury despite outperforming the latter on various fronts.

Source: DeFi Llama

These treasury holdings of MakerDAO can be deployed to improve various aspects of the network.

Recently, the MakerDAO governance approved the proposal for onboarding GNO as a collateral asset in Spark Protocol. For the uninitiated, the Spark Protocol is the DAO’s debut offering and allows users to borrow or supply Ether [ETH], Staked ETH [stETH], DAI, and savings DAI at competitive rates.

This means that GNO tokens can now be used as collateral when borrowing stablecoins on the platform, potentially expanding the range of available assets and providing more flexibility for users seeking to engage in decentralized lending and borrowing activities.

Source: MakerDAO

New steps for MakerDAO

There was another governance proposal that was approved over the last few days relating to Credix Finance Assessment Work.

With the approval of the proposal from Credix Finance, capital access in underserved Latin American markets will expand. Credix Finance and MakerDAO have collaborated to provide loans and funding to individuals, small businesses, and consumers in these markets.

This partnership aims to increase financial inclusion and drive economic growth while generating an estimated annual gross revenue of $9.75 million for MakerDAO.

As the approved Arranger, Credix Finance will handle sourcing, underwriting, and deal structuring, while the Underwriter will provide additional capital and assist with due diligence. The facility of 150 million DAI will support FinTech lenders in offering financial services to their customers.

The multi-tranche structure will allocate risk, with MakerDAO providing senior capital from its liquidity pool. Loans will be directed towards small businesses, consumers, and other creditworthy opportunities, with a focus on impact investing and the avoidance of environmentally harmful asset classes.

State of the protocol

Despite all these developments, MakerDAO’s TVL declined by 14.3% in the last 30 days. The revenue generated by the protocol also fell by 3.9% during this period.

Source: Token Terminal

The developments being made on MakerDAO could help the protocol improve in these areas in the future.

However, MakerDAO wasn’t the only protocol that was making developments. The Lido protocol, despite its low treasury reserves, was observed to be making massive changes.

Lido capitalizes on NFT attention

On 17 May, NansenAI revealed that when a user sends an ETH withdrawal request to Lido Finance, they receive an NFT. After the withdrawal request is accepted, the NFT image will be updated. The user can utilize the NFT as a transferable receipt for the ETH withdrawal from Lido.

The introduction of ETH Withdrawal NFTs in Lido Finance will enhance the user experience by providing a verifiable and transferable withdrawal certificate for ETH transactions. This feature increases transparency and convenience for users engaging with the Lido protocol.

Due to Lido capitalizing on the hype around its protocol due to staking through NFTs, the protocol has retained daily activity on its platform. Token Terminal’s data indicated that daily active addresses on Lido have by 77% over the last 30 days.

Subsequently, because of the high activity on the network, the fees generated on the protocol also increased by 30% during the same period.

Source: token terminal

Even though Lido has outperformed MakerDAO in terms of fees generated and activity on the network, MakerDAO was observed to be doing well on the social front.

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According to Santiment, MKR saw significantly more social volume than Lido over the last month. Coupled with that, the sentiment around Maker was much more positive than that around Lido.

Source: Santiment

However, the state of the tokens of these respective protocols wasn’t affected by public sentiment on social networks. The market cap of LDO grew positively over the last few weeks whereas MKR’s market cap failed to see green.

The network growth of both tokens suggested that new addresses were more interested in buying MKR rather than LDO at press time.

Source: Santiment

Source: https://ambcrypto.com/makerdao-treasury-reserves-overtake-lido-but-whats-stopping-its-ascent/