The Revenue of DAI Stablecoin Issuer Plummets by over $4M in Q3

• MakerDAO saw its revenue fall in 2022 Q3 as loans declined with few liquidations.
• The income fell by over $4 million, representing 86% from the previous quarter. 
• Its ETH-based and BTC-based assets dropped by 74% and 66%, respectively.

MakerDAO, the issuer of the DAI stablecoin, experienced its revenue fall in the third quarter of 2022 due to a decline in loan demand and few liquidations.

The decentralized autonomous organization (DAO) saw its income plummet to a little over $4 million in Q3, down 86% from the previous quarter, according to a tweet by Johnny TVL, a Messari analyst.

The decline in revenue has been attributed by the senior research analyst to a small number of liquidations and weak credit demand. Ether (ETH) and Wrapped Bitcoin (wBTC), its two major income generators, both underperformed in the most recent quarter, with ETH-based assets’ revenue decreasing by 74% and BTC-based assets’ revenue falling by 66%, respectively.

These cryptos are pledged as security by borrowers as collateral for loans denominated in the Dai (DAI) stablecoin, offering some protection from market volatility at the cost of interest payments.

Additionally, the analyst noted a decline in MakerDAO’s collateral ratio to 1.1 from 1.9 during the same period last year. The analyst added that “costs are not that elastic” because the report revealed that expenses were still high at $13.5 million in the quarter, declining just 16% from the prior quarter.

Recently, MakerDAO started a proposal to invest $500 million in treasuries and bonds to boost the return on the assets it holds as collateral. The increase of Real World Asset (RWA) backed loans currently represents 12% of MakerDAO’s total income following the successful rollout of its largest RWA-backed loan to Huntingdon Valley Bank (HVB) in the third quarter of 2022.