MakerDAO, the DeFi world’s 3rd largest platform by TVL, has seen its governance token MKR soar by 66% in the last 3 months. This is against the backdrop of Bitcoin’s double-digit decline in mid-August and the other top DeFi coins’ large losses. Why is MKR doing so well while the rest of the crypto market is in trouble? Let’s take a closer look at the veteran DeFi platform’s success formula.
MakerDAO’s Rise in Recent Market Gloom
The last few months haven’t been the best for the crypto market. After experiencing a strong correction in mid-August, Bitcoin (BTC) is now trading 7.5% lower than 3 months ago. But the real carnage unfolded in the DeFi niche, where the majority of the top protocols' coins experienced large double-digit losses. Lido (LDO), AAVE (AAVE), JustLend (JST), Uniswap (UNI), Curve (CRV), and nearly all the other prominent DeFi cryptos have lost ground in the last 3 months, in some cases with losses as high as nearly 50% of their value.
Yet, amidst all this gloom, MakerDAO’s MKR token has posted spectacular growth figures, rising 66% on a 3-month basis as of 27 August. Right now, the token is in a correction mode, which was expected given the large scale of the recent gains. Despite the correction, MKR is doing extremely well and is widely expected to power on after short-term corrections and adjustments.
Why is MKR currently the darling of the crypto investor community? Our analysis indicates four key reasons, all of fundamental nature, for the current “MKR mania”.
MKR Strong Performance Reasons
1. New Buyback Mechanism
We estimate that the most influential factor that has bolstered MKR's performance is its recently implemented buyback mechanism. Under the old system, MKR tokens were bought back from the market only when the collaterisation levels on the platform dipped too low. However, the new rules involve a significant change. Now, MKR can be bought back from the market and burnt, irrespective of the collaterisation levels. Given that MKR holders have a say in the platform's governance, they're likely to be interested in regularly reducing the coin’s supply. Via this route, the new mechanism can be used by the governance community to regulate the supply and support the coin's price. The new buyback rules were implemented in July, and their effects are already evident in the market.
2. Maker's Strategic Roadmap
Unveiled in May, Maker's new strategic roadmap has been another significant support factor for MKR. The roadmap laid out several ambitious plans, including the launch of MakerDAO’s own blockchain, rebranding, and new tokenomics with added utility tokens. The new blockchain will maintain a link to and interoperability with Ethereum, where Maker is currently based.
The expansive and ambitious nature of the roadmap seems to have persuaded many investors that Maker is brimming with operational and financial vitality.
3. Consistent Revenue Generation
The most conservative among investors aren’t going to be convinced by buyback mechanism acrobatics or plans for own blockchain. For these folk, Maker has something more tangible on the table – consistent growth in revenues.
Since mid-to-late 2022, Maker’s monthly revenues have been growing consistently. In September 2022, Maker achieved a monthly revenue of about $1 million. For the month of July 2023, the protocol’s monthly revenue already stood at $8.6 million. The solid revenue growth is another testament to the platform's robust business model and a magnet for investors.
4. Commitment from Key Investor
Earlier this year, Maker’s influential co-founder and figurehead, Rune Christensen, rebalanced his crypto portfolio by upping his MKR holdings while simultaneously reducing his stake in a major competitor coin, Lido (LDO). These moves were quickly spotted by crypto analysts via Christensen’s known public Ethereum address. Observers were quick to pinpoint this shift, which also added an extra layer of assurance for potential investors.
Collectively, these four major factors have been instrumental in MKR's market-defying performance. However, it's not just about the past or the present. With such solid foundations and confident growth, MKR’s future also looks promising. As noted earlier, right now, the token is in correction mode after the earlier impressive gains. We believe that this development is temporary and not likely to persist long-term. With great fundamentals, steady long-term revenue growth, a smart buyback mechanism, and ambitious brand-building plans, the outlook for MKR is definitely bullish.
MKR might be a great option to evaluate for investment funds and retail investors who are not shy of venturing beyond Bitcoin. So far, when it comes to ROI, MKR has beaten BTC, and the vast majority of other large-cap cryptos, on every possible critical time interval considered! All while operating in the highly volatile and currently very bearish DeFi niche too!
MakerDAO’s Rise in Recent Market Gloom
The last few months haven’t been the best for the crypto market. After experiencing a strong correction in mid-August, Bitcoin (BTC) is now trading 7.5% lower than 3 months ago. But the real carnage unfolded in the DeFi niche, where the majority of the top protocols' coins experienced large double-digit losses. Lido (LDO), AAVE (AAVE), JustLend (JST), Uniswap (UNI), Curve (CRV), and nearly all the other prominent DeFi cryptos have lost ground in the last 3 months, in some cases with losses as high as nearly 50% of their value.
Yet, amidst all this gloom, MakerDAO’s MKR token has posted spectacular growth figures, rising 66% on a 3-month basis as of 27 August. Right now, the token is in a correction mode, which was expected given the large scale of the recent gains. Despite the correction, MKR is doing extremely well and is widely expected to power on after short-term corrections and adjustments.
Why is MKR currently the darling of the crypto investor community? Our analysis indicates four key reasons, all of fundamental nature, for the current “MKR mania”.
MKR Strong Performance Reasons
1. New Buyback Mechanism
We estimate that the most influential factor that has bolstered MKR's performance is its recently implemented buyback mechanism. Under the old system, MKR tokens were bought back from the market only when the collaterisation levels on the platform dipped too low. However, the new rules involve a significant change. Now, MKR can be bought back from the market and burnt, irrespective of the collaterisation levels. Given that MKR holders have a say in the platform's governance, they're likely to be interested in regularly reducing the coin’s supply. Via this route, the new mechanism can be used by the governance community to regulate the supply and support the coin's price. The new buyback rules were implemented in July, and their effects are already evident in the market.
2. Maker's Strategic Roadmap
Unveiled in May, Maker's new strategic roadmap has been another significant support factor for MKR. The roadmap laid out several ambitious plans, including the launch of MakerDAO’s own blockchain, rebranding, and new tokenomics with added utility tokens. The new blockchain will maintain a link to and interoperability with Ethereum, where Maker is currently based.
The expansive and ambitious nature of the roadmap seems to have persuaded many investors that Maker is brimming with operational and financial vitality.
3. Consistent Revenue Generation
The most conservative among investors aren’t going to be convinced by buyback mechanism acrobatics or plans for own blockchain. For these folk, Maker has something more tangible on the table – consistent growth in revenues.
Since mid-to-late 2022, Maker’s monthly revenues have been growing consistently. In September 2022, Maker achieved a monthly revenue of about $1 million. For the month of July 2023, the protocol’s monthly revenue already stood at $8.6 million. The solid revenue growth is another testament to the platform's robust business model and a magnet for investors.
4. Commitment from Key Investor
Earlier this year, Maker’s influential co-founder and figurehead, Rune Christensen, rebalanced his crypto portfolio by upping his MKR holdings while simultaneously reducing his stake in a major competitor coin, Lido (LDO). These moves were quickly spotted by crypto analysts via Christensen’s known public Ethereum address. Observers were quick to pinpoint this shift, which also added an extra layer of assurance for potential investors.
Collectively, these four major factors have been instrumental in MKR's market-defying performance. However, it's not just about the past or the present. With such solid foundations and confident growth, MKR’s future also looks promising. As noted earlier, right now, the token is in correction mode after the earlier impressive gains. We believe that this development is temporary and not likely to persist long-term. With great fundamentals, steady long-term revenue growth, a smart buyback mechanism, and ambitious brand-building plans, the outlook for MKR is definitely bullish.
MKR might be a great option to evaluate for investment funds and retail investors who are not shy of venturing beyond Bitcoin. So far, when it comes to ROI, MKR has beaten BTC, and the vast majority of other large-cap cryptos, on every possible critical time interval considered! All while operating in the highly volatile and currently very bearish DeFi niche too!