Will MakerDAO find savior in YFI as MKR declines

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  • Mak­er­DAO vot­ed in favor of a 2% extra yield income from Yearn Finance.
  • While its devel­op­ment activ­i­ty surges, MKR’s net­work growth fell.

After its pro­pos­al in Novem­ber to deploy $100 USD Coin [USDC] into the Yearn Finance [YFI] DeFi pro­to­col, Mak­er­DAO [MKR] final­ly approved it. Details from the poll showed that 71.56% of the MKR com­mu­ni­ty vot­ed in favor of the propo­si­tion, while 28.44% pre­ferred to say no to the “Yearn to earn Yield” proposal.

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What’s with the TVL cause?

The pro­pos­al cen­tered around a DeFi strat­e­gy to help Mak­er earn an annu­al 2% yield, which would also help with PSM USDC reserves and trans­fer. Mak­er­DAO also not­ed that the approval meant that it added anoth­er means to gen­er­ate income and add to its reserves.

Despite the com­pli­ance, Mak­er remained sec­ond in the DeFi Total Val­ue Locked (TVL) stand­ings. Although it lost the pole posi­tion from Lido Finance [LDO], MKR’s TVL increased a whop­ping 20.42%, DeFi Llama’s data showed. 

The increase in TVL meant that more investors have shown inter­est in the dApps under the Mak­er net­work. At press time, the Mak­er­DAO TVL was $7.5 bil­lion. Still, it was mas­sive­ly down from its 2022 All-Time High (ATH).


Source: DeFi TVL

Inter­est­ing­ly, Mak­er seemed to be in its pro­pos­al roll­out peri­od. On 23 Jan­u­ary, the gov­er­nance arm of the DAI sta­ble­coin devel­op­ers put out anoth­er offer for vot­ing. But the con­di­tion for this points to the off-board­ing of USDC‑A, USDP‑A and GUSD‑A vaults.

If approved, Mak­er not­ed that it would set forth a 1500% liq­ui­da­tion ratio on the afore­men­tioned vaults. Vot­ing on this is billed to end on 26 Jan­u­ary. So, Mak­er cleared the air on the impli­ca­tions, saying:

“Once the men­tioned liq­ui­da­tion para­me­ters are exe­cut­ed, all USDC‑A, USDP‑A, and GUSD‑A posi­tions with a col­lat­er­al­iza­tion ratio below 1500% will be liquidated.”

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

On development activity and MKR’s network growth

Per its devel­op­ment activ­i­ty, San­ti­ment showed that Mak­er­DAO excelled in that part. At the time of writ­ing, the MKR devel­op­ment activ­i­ty was 13.64. This was an uptick from the down­turn on 23 Jan­u­ary. An expla­na­tion of this increase points to bet­ter con­tri­bu­tion by devel­op­ers to the pub­lic repos­i­to­ries of the Mak­er network.

On the flip side, the MKR net­work growth declined. More­so, it reached one of the low­est points in over six months, accord­ing to on-chain data from San­ti­ment. This implied that Mak­er was los­ing trac­tion and strug­gling with adop­tion since new address­es were not being created.

MakerDAO development activity and network growth

Source: San­ti­ment

In terms of its token price, Coin­Mar­ket­Cap showed that MKR was exchang­ing hands at $708.79. This account­ed for a slight 0.56% in the last 24 hours.

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