DAI supply has fallen by 13% this week

In the past week, the total supply of DAI, a popular stablecoin, has experienced a notable 13% decrease. This drop could potentially signify increased demand for DAI, leading to a reduction in supply caused by increased usage and token burning. Keep up with the latest developments in the world of cryptocurrencies with our daily news and analysis.

MakerDAO Sheds Significant Value

MakerDAO, one of the largest stablecoin issuers globally, recently experienced a reduction in total value locked (TVL), annualized fee income and DAI supply. The TVL dropped off, with a decrease in loans reportedly fueled by concerns over the sustainability of the DAI stablecoin. On-chain data reveals that this decrease was caused by a reduction in collateralized loans on the MakerDAO platform.

As a result of these developments, MKR’s value was impacted resulting in a 25% decrease during the same duration. Though DAI recently returned to parity with the US dollar, its status remains uncertain, with concerns about its ability to remain pegged. This uncertainty has created a decline in MakerDAO’s TVL in the past week. The drop in DAI supply can also lead to a reduction in fee income, which is paid in MKR tokens. MakerDAO generates revenue in fees when users open Collateralized Debt Positions (CDP) and generate DAI.

The recent decrease in DAI’s supply led to a decline in MakerDAO’s annualized fee income. With the stability fee being paid in DAI and converted to MKR, lowering the DAI supply can lead to a decline in the amount of MKR tokens distributed as fee income. The annulised fee income decreased by 10% since the collapse of the Silicon Valley Bank. DAI and other stablecoins experienced a decrease while Tether’s USDT supply is believed to have finally reached 74 billion for the first time since May 2022 due to regulatory scrutiny and the banking issues faced by its stablecoin competitors.

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