MakerDAO, the governing body of Maker Protocol, has seen its revenue plummet in the third quarter of 2022, caused by falling loan demand and few settlements, while expenses have remained high.
According to a tweet from October 13 Johnny_TVL, Messari analyst and co-author of “The State of Maker Q3 2022”, the decentralized autonomous organization (DAO) saw its revenue plummet to just over $4 million in the third quarter, down 86% from the previous quarter.
One result of this has been MakerDAO’s first quarter of net revenue loss since 2020.
Messari’s senior research analyst has pointed to poor settlements and weak loan demand as reasons for the revenue decline.
Its two largest sources of income, Ether (ETH) and Wrapped Bitcoin (wBTC), have performed poorly in the last quarter, with income from ETH-based assets falling 74% and those from BTC-based assets 66%.
Borrowers use these cryptocurrencies as collateral for Dai (DAI) stablecoin loans, providing some security against the volatility that often occurs in crypto markets at the expense of interest paid on the loans.
The analyst has also pointed to a drop in the MakerDAO collateral ratio, suggesting that it has dropped to 1.1 from 1.9 in the same period last year.
Nevertheless, “the expenses are not so flexible”, said the analyst, as the report shows that expenses have remained high in the quarter, with USD 13.5 million, falling only 16% compared to the previous quarter.
Meanwhile, MakerDAO has recently taken steps to increase the return on the assets it holds as collateral, having initiated a proposal to invest USD 500 million in US Treasury bills and bonds. MakerDAO believes this will provide the protocol with additional low-risk performance.
Another silver lining for MakerDAO was the growth of real-world asset-backed loans (RWAs), now accounting for 12% of its total revenue, after in Q3 2022 will successfully launch its largest RWA-backed loan ever to Huntingdon Valley Bank (HVB).
The loan, which created a $100 million DAI vault, constitutes a new type of collateral in Maker Protocol, which can help you generate additional income through vault stability fees associated with maintaining your vault. and to the minting of DAI.
HVB can still benefit from this integration, because it allows it to effectively increase its legal lending limit, and MakerDAO hopes that if all goes well, other banks will follow in HVB’s footsteps.
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