Trouble in DeFi-Land? Ether in MakerDAO at annual low | BTC-ECHO
Decentralized finance or #defi for short is one of the big trends in the Ethereum ecosystem. Recently, we discussed whether and how Decentralized Finance can also be implemented in the Bitcoin ecosystem. Likewise, MakerDAO and the associated stable coin Dai was often a topic, which we took a closer look at.
MakerDAO is a decentralized lending project. Users can get a deposit in Ethereum – the so-called Collateralized Debt Position or short CDP tokens of Stable Coins Dai. Nothing on earth is free, so users must pay a fee for these borrowed Dai tokens.
With regard to MakerDAO, there is currently an ailment: The ethers stored in the MakerDAO Smart Contract are at an annual low, as can be observed on Defipulse:
Since April 10, the amount of ether tokens that are stored in the MakerDAO contract dropped from 2.2 million ETH to 1.3 million ETH. Considering the ether price, the value of the collaterals behind MakerDAO has not fallen so dramatically:
Nevertheless: Here, too, the level of all CDPs fell by 40 percent from 27 June.
What can this be? Undoubtedly, the fees mentioned above – the so-called stability fee – play a role. This currently amounts to 20.5 percent. The dramatic fall of the CDP in mid-July coincides with the recent increase in fees (presented here via Maker Tools):
On July 14, this fee was raised from 17.5 percent to over 20 percent. It was not just a significant increase of over three percent. The psychological limit of 20 percent was cracked, so it's no wonder that this decision on maker governance is not very attractive for the decentralized lending market.
Influence of MakerDAO on the rest of the DeFi market
At first glance one could say that this development only affects MakerDAO and accordingly the rest of the DeFi ecosystem is not affected. And indeed, in the majority of the other projects, the ether positions held in the respective smart contracts have risen. Compound, Uniswap and dYdXs collateral positions are even up to date at new all-time highs. Only Dharma's deposits trace the development of the entire CDP of MakerDAO: Since the beginning of July, the ETH deposits Dharmas have fallen by more than 40 percent. Dharma recently announced that they are lending pausewhich certainly does not suit the current trend of the lending platform.
Even the current good position of many DeFi projects beyond Dharma and MakerDAO should not be regarded as the last word. The low level of deposits in Makers Smart Contract means that interest in the Stable Coin DAI is also declining. For many, Maker or Dai is the first step in the DeFi ecosystem. As the aforementioned positions also work with DAI, MakerDAO's slump can spread to these platforms.
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