Well-positioned to take you to heaven, MakerDAO achieves record revenue in Q2 2024: $85 million

According to data from Token Terminal, MakerDAO's revenue for the second quarter of 2024 reached a new high of an impressive $85 million. Since December 2017, MakerDAO has been issuing and managing the stablecoin DAI, which is overcollateralized and pegged 1:1 to the US dollar. It is currently the fourth largest stablecoin with a circulation of $5.1 billion.

MakerDAO is a decentralized autonomous organization that operates on the Ethereum blockchain to issue DAI (a US dollar-pegged stablecoin). Through overcollateralized lending, DAI stablecoins are generated, and the mechanism involves the following steps:

1. Collateral Assets: Users deposit cryptocurrencies (such as ETH, WBTC, etc.) into MakerDAO's smart contracts as collateral.
2. Generating DAI: Based on the value of the collateral and a predefined collateralization ratio (usually above 150%), the smart contract allows users to generate a certain amount of DAI. For example, if a user collateralizes $150 worth of ETH, they may only be able to generate 100 DAI.
3. Stability Fee: Users are required to pay a stability fee when generating DAI, which is adjusted based on market conditions and governance votes. The stability fee is one of MakerDAO's main sources of revenue.
4. DAI Circulation: The generated DAI can be traded on decentralized exchanges, used in DeFi protocols, or utilized for payments.
5. Repayment and Redemption: Users can repay DAI at any time and pay the corresponding stability fee. Once all DAI is repaid, users can redeem the previously collateralized cryptocurrency.
6. Liquidation: If the value of the collateral drops, causing the collateralization ratio to fall below the minimum requirement, the system will automatically trigger liquidation. During liquidation, some collateral will be sold to repay DAI and pay a liquidation penalty.

Although DAI holds a small market share in the stablecoin market, it remains the largest decentralized stablecoin. As of July 5, 2024, the market shares of the top five stablecoins in the cryptocurrency market are as follows:

1. Tether USDT: 70.02%
2. USD Coin USDC: 21.13%
3. DAI: 3.3%
4. Ethena USDe USDE: 2.29%
5. First Digital USD FDUSD: 1.25%

• Stability Fee: When users generate DAI by collateralizing cryptocurrencies, they need to pay a stability fee. This fee is adjusted based on market conditions and governance votes and is MakerDAO's primary source of revenue.
• DAI Savings Rate (DSR): DAI holders can deposit DAI into the DSR contract to earn interest. The interest is sourced from the system's stability fee revenue, and the DSR interest rate is determined by governance votes.
• Liquidation Penalty: When the value of collateral drops to a certain level, the system automatically liquidates the collateral to ensure the stability of DAI. During liquidation, borrowers need to pay a penalty, which also contributes to MakerDAO's revenue.
• Investment Returns: MakerDAO may invest some funds in low-risk assets, such as US treasuries or other stablecoins, to generate additional returns.

Last year's governance proposal allowed MakerDAO to maintain revenue of $85 million during the second quarter of this year, despite market downturns.

Building on past experiences with the MakerDAO governance forum, The DAO, a new proposal was approved last week to invest $500 million worth of the stablecoin DAI into US treasuries and corporate bonds.

The proposal allocates 80% of the funds to US short-term treasuries and 20% to investment-grade corporate bonds to earn interest.

TJ Ragsdale, the asset manager at MakerDAO, stated, "Real-world income can offset some of the income we lose from cryptocurrencies."

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