MakerDAO (MKR) Rises to 16-Month High Amidst Market Stagnation, Here’s the Reason

The cryptocurrency market has been relatively stagnant since mid-March, but MakerDAO’s MKR token has experienced significant gains. With a staggering 200% increase since the start of the year, MKR has reached its highest level since May 2022.

So, what exactly is driving this upward momentum for MakerDAO’s DeFi asset? Let’s explore.

Surging Revenue for MakerDAO

According to DeFi researcher Thor Hartvigsen, the surge in Maker revenue is a significant factor behind MKR’s bullish performance. Currently, MakerDAO is the largest revenue-generating protocol in the DeFi ecosystem, with an annualized revenue of $193 million.

Key contributors to this revenue surge include interest payments from DAI stablecoin minters using on-chain collateral and real-world asset (RWA) collateral, such as U.S. Treasury bills. Additionally, the growth of the DAI supply and better rates on U.S. T-bills has bolstered MakerDAO’s revenue.

“Maker revenue depends primarily on the total market cap of DAI as the collateral backing this stablecoin is what generates fees.”

If the DAI supply continues to grow, Maker revenue will keep increasing, which will likely have a positive impact on the token’s price. Another contributing factor to MakerDAO’s revenue growth is the rise in the DAI Savings Rate (DSR). This incentivizes users to hold DAI instead of non-interest-bearing stablecoins like USDT and USDC, as the DSR currently stands at 5%, providing higher returns compared to other stablecoins on DeFi platforms.

The MakerDAO roadmap includes an “Endgame Plan,” which aims to reduce reliance on centralized collateral like USDC. The protocol’s ultimate goal is to accumulate more Ethereum, leading to DAI becoming a free-floating asset. With solid long-term fundamentals for both MakerDAO and DAI, it’s no wonder the token is defying the overall market trend.

MKR Price Outlook

At the time of writing, MKR is trading at $1,510, representing a 7% increase for the day. During early Asian trading on September 28, the DeFi asset hit a 16-month high of $1,523. Over the past weekend, MKR has gained an impressive 18% and has increased by 27% in the last two weeks. However, it is important to note that MKR is still down 76% from its all-time high of $6,292 in May 2021, according to CoinGecko.

In conclusion, MakerDAO’s MKR token has been defying market stagnation and experiencing significant price appreciation. With the surge in revenue, growing DAI supply, higher DAI Savings Rate, and a solid long-term roadmap, MakerDAO’s overall outlook appears promising.

Editor’s Notes:

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