Monday, May 27, 2024

MakerDAO price rebounds as DAI holds its peg and investors search for stablecoin security


Its been a tough couple of weeks for the cryptocurrency market. Bitcoin (BTC) price is nowhere close to the price estimates of most analysts, a number of stablecoins misplaced their peg and the demise of one of many prime decentralized finance (DeFi) platforms sparked an occasion that resulted in $900 billion vanishing from the entire crypto market capitalization.

Within the midst of the widespread fallout, MakerDAO (MKR) managed to show disaster into alternative and the collapse of TerraUSD (UST) has introduced renewed consideration to DAI, the longest-running decentralized stablecoin.

Knowledge from Cointelegraph Markets Professional and TradingView reveals that as the collapse of Terra (LUNA) price accelerated from Might 9 to Might 12, MKR climbed 66.2% from a low of $952 on Might 12 to its present worth of $1,587.

MKR/USDT 1-day chart. Supply: TradingView

Three doable causes for the MKR’s reversal in momentum embody DAI sustaining its peg throughout the current market turmoil, the usage of a MakerDAO vault to finance provide chain shipments and the addition of staked Ether (ETH) as a type of collateral to mint DAI.

DAI holds regular throughout sturdy market turbulence

One of the vital vital components giving investors extra confidence within the MakerDAO ecosystem is the truth that DAI held its greenback peg throughout a shaky market that noticed a handful of the preferred stablecoins lose their pegs.

In the course of the peak of volatility, the price of DAI oscillated from a low of $0.9961 on Might 11 to a excessive of $1.0046 on Might 12 and is at the moment priced at $0.9994.

DAI holding regular regardless of a provide lower of greater than 2.2 billion DAI might have given investors extra confidence, particularly after Tether (USDT) briefly noticed its price hit a low of $0.9704.

Actual-world adoption continues

One other issue offering a lift to MKR is its rising actual world adoption. Not too long ago, the MakerDAO vault was used to finance a cargo of Australian beef and further “use instances” are being deliberate.

On Might 9, a MakerDAO vault was utilized at the side of the decentralized asset financing protocol Centrifuge to permit the commerce finance supplier ConsolFreight to mint DAI that was used to finance the transaction.

A nonfungible token (NFT) that contained the cargo and bill knowledge was additionally minted within the course of for monitoring functions and to assist hold a document of the transaction. The cargo can be being tracked utilizing Provenance, Mastercard’s blockchain traceability resolution.

This transaction helped to exhibit one software of good contracts and stablecoins within the provide chain trade.

Staked Ether as collateral

One other issue constructing momentum for MakerDAO is the addition of help for staked Ether as a type of collateral on the protocol.

sETH2 permits these collaborating in staking on the Ethereum BNB Chain to realize entry to funds that may be in any other case locked up for an unknown period of time and put them to make use of incomes a yield in DeFi.

The collapse of UST, its knock-on results and the addition of Ether as collateral positions MakerDAO as the top-ranked DeFi protocol by whole worth locked (TVL), in keeping with knowledge from Defi Llama.

High-5 protocols by whole worth locked. Supply: Defi Llama

MakerDAO claiming the highest spot comes after Curve, one other standard stablecoin liquidity protocol, noticed its TVL fall from $19.32 billion on Might 5 to $8.71 billion on Might 16.

The views and opinions expressed listed below are solely these of the writer and don’t essentially replicate the views of Each funding and buying and selling transfer entails danger, it is best to conduct your individual analysis when making a choice.