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MakerDAO protocol flourishes despite market challenges. Meanwhile, increased user activity and the success of the money market spark protocol has contributed to its continued growth.
Spark protocol is a DAI-focused money market network that collects liquidity from MakerDAO. The latest stats indicated that spark protocol dominated the lending market last month.
.@spark_protocol_ has been dominating the lending market over the past month.
— Emperor Osmo🧪 (@Flowslikeosmo) November 26, 2023
Over $629M in active loans and ~10% of the lending market. 🤯 pic.twitter.com/pU6z0LDBfi
The money market protocol accounted for 10% of the lending marketplace, with active loans amounting to over $629 million. This dominance will likely impact DAI and MKR in significant ways. The multiple active loans will possibly shift dynamics into alternative lending protocols.
Spark protocol could be attractive to market players looking for diverse options due to the network’s top-notch liquidity sources.
DAI’s dwindling supply
DAI supply has plummeted since May 2021. Moreover, it dipped from late October’s 5.6 billion to press time levels of 5.3 billion.
3/ The supply of DAI dipped below 4 bill for the first time since May 2021. The fall of UST started DAI's supply decline after it shook faith in crypto-backed stables. The DSR recently rose to 8%, which did draw attention to the program, but has not yet caused any supply growth. pic.twitter.com/qE1KYKIwxk
— Rebecca Stevens (@rebeccastev) August 14, 2023
That shows individuals could be searching for lucrative yields in different stablecoins, refraining from holding DSR. While players have steadily used wsETH and ETH vaults, increased borrowing at Spark has augmented Ether’s debt. Moreover, WBTC core vaults surged to 86M from 76M in DAI exposure.
Stablecoins’ liquidity ratios are declining as DAI supply reduces and more individuals transition to volatile assets. That’s a worrying indicator, and Maker should consider recalling funds amid deteriorated liquidity or modifying borrowing rates.
MKR price
Maker’s native coin traded at $1,460 at press time, following a 0.23% increase within the previous day. Moreover, it gained 7.50%on its weekly price chart.
The altcoin’s upside stance mirrors broad market optimism within the past few sessions. The MakerDAO team should work on more advancements to keep the project afloat (considering the weakening network growth). Further, there has been a decline in MKR new addresses, confirming declining interest in the crypto.
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