DEFI

Who's Making Money in a Bear Market? MakerDAO Turns to Real-World Assets

share
Who

Despite the bear market in 2022, the decentralized stablecoin protocol MakerDAO still delivered impressive results, with a net profit of 18.8 million for the full year of 2022. Although this is a significant drop from the 90.2 million in 2021, compared to other loss-making crypto institutions, MakerDAO continues to maintain its image as a top performer.

Table of Contents

Potential Risks

Despite weathering the crypto volatility of 2022, MakerDAO has consistently maintained the peg of its stablecoin DAI and successfully ensured the organization's profitability through investments in real-world assets. However, MakerDAO has also identified several risks that need to be closely monitored:

  • Liquidation of crypto collateral can be settled reasonably easily on-chain. However, off-chain collateral liquidation has not been tested, which introduces uncertainty regarding the protocol's ability to maintain collateral value through off-chain measures.
  • Unilateral government enforcement leading to the seizure of off-chain collateral could adversely impact the integrity of the protocol and MakerDAO's ability to maintain DAI's peg to the US dollar.
  • Significant fluctuations in interest rates could have a negative impact on the value of Maker's collateral.