MakerDAO suffers a fall in annualized fee income, thanks to SVB

Please fol­low and like us:
Pin Share

  • MakerDAO’s annu­al­ized fee income has been decreas­ing since SVIB’s collapse.
  • Wan­ing buy­ing pres­sure puts MKR’s price at risk of fur­ther decline.

The annu­al­ized fee income of lead­ing decen­tral­ized finance pro­to­col Mak­er­DAO [MKR] has declined since the col­lapse of Sil­i­con Val­ley Bank (SVIB) on 10 March, data from Maker­Burn revealed. 

At 43.23 mil­lion DAI tokens at press time, Maker’s fee income has decreased by 11% in the last week. 

The exact amount of fee income that Mak­er­DAO gen­er­ates varies depend­ing on a num­ber of fac­tors, includ­ing the demand for DAI, the amount of col­lat­er­al locked up in the Mak­er pro­to­col, and the sta­bil­i­ty fee and liq­ui­da­tion penal­ty fee rates set by MKR holders. 

The steep drop in fee income on the pro­to­col in the last week was attrib­ut­able to the DAI sta­ble­coin los­ing its $1 peg after USDC’s issuer con­firmed that it held deposits at SVB. 

As USDC was a sig­nif­i­cant col­lat­er­al back­ing for DAI, its de-peg­ging event result­ed in a tem­po­rary loss of dol­lar par­i­ty for DAI.

Is your port­fo­lio green? Check out the Mak­er Prof­it Calculator

This also cul­mi­nat­ed in a sig­nif­i­cant drop in MKR’s val­ue forc­ing the pro­to­col to imple­ment a num­ber of emer­gency pro­pos­als to pre­vent anoth­er black swan event. All of these led to a drop in the protocol’s fee income in the last week. 

Source: Maker­Burn

Up and down goes MKR’s price

Fol­low­ing the announce­ments on 12 March by Fed­er­al Reg­u­la­tors to make SVB’s depos­i­tors whole, MKR’s price ral­lied by dou­ble dig­its. Accord­ing to Coin­Mar­ket­Cap, the DeFi token exchanged hands for as high as $956 in the ear­ly trad­ing hours of 13 March.

How­ev­er, as the week pro­gressed, buy­ing momen­tum dropped grad­u­al­ly, caus­ing MKR’s price to ini­ti­ate a down­trend. At press time, the token trad­ed at $739.95, hav­ing shed 23% of its val­ue since Monday.

With wan­ing buy­ing pres­sure, MKR has trad­ed with­in a tight range in the past two days. An assess­ment of its price on a dai­ly chart revealed that it has oscil­lat­ed with­in the $745 and $740 price range since 16 March.

Read Mak­er [MKR] Price Pre­dic­tion 2023–24

At press time, key momen­tum indi­ca­tors rest­ed below their respec­tive neu­tral lines. For exam­ple, MKR’s Rel­a­tive Strength Index (RSI) and its Mon­ey Flow Index (MFI) were both posi­tioned at 44.88 and 45.80, respectively. 

With the mar­ket trad­ing side­ways in the past few days, MKR traders have become increas­ing­ly skep­ti­cal of sud­den price swings, and have, as a result, refused to inten­si­fy accumulation.

Although the dynam­ic line (green) of MKR’s Chaikin Mon­ey Flow (CMF) was still in the pos­i­tive ter­ri­to­ry at press time, in a down­trend posi­tion already, a fur­ther decline in pos­i­tive sen­ti­ment will push the CMF below the cen­ter line. If this hap­pens, it would mark the exit of liq­uid­i­ty need­ed to ini­ti­ate any ral­ly in MKR’s price. 

Source: MKR/USDT on TradingView

Source link

Please fol­low and like us:
Pin Share

Leave a Reply

Your email address will not be published.