MakerDAO Initiates Massive $600 Million DAI Investment In USDe And sUSDe
April 02 2024 - 5:00PM
NEWSBTC
Decentralized Finance (DeFi) protocol MakerDAO is considering
allocating 600 million DAI stablecoins to the USDe and staked USDe
(sUSDe) protocols through the DeFi lending platform Morpho Labs.
The proposed allocation aims to improve risk management and
maximize user incentives in the DeFi landscape. MakerDAO Sets
Maximum 600 Million DAI Allocation The Spark DAI Vault, launched in
2023 as a lending platform, experienced strong demand soon after
its launch, according to MakerDAO’s announcement on the protocol’s
governance forum. Related Reading: Tether Buys 8,888 Bitcoin
For $618 Million, But Why Is Price Down? Given the desire to keep
liquidity risk at an acceptable level, MakerDAO proposes a greater
allocation of DAI to the USDe pools, which can be immediately
redeemed via Ethena (ENA), a synthetic dollar protocol developed on
the Ethereum blockchain. This reallocation also allows Ethena
to retain a larger revenue share for their insurance fund,
potentially improving the overall risk profile of MakerDAO’s Ethena
allocation. Furthermore, MakerDAO recommends focusing future
allocations on the 86% and 91.5% Loan-To-Liquidity-Value (LLTV)
pools, which have shown “higher efficiency” regarding borrow rates
and user demand. While lower LLTV pools, such as the 77% and 94.5%
pools, will continue to receive allocations, they will be
proportionally lower than the two primary pools. To mitigate
potential insolvency risks and ensure a favorable risk-reward
ratio, MakerDAO limits the total allocation to 600 million DAI.
However, the Dividend Debt Mechanism (DDM) line parameter is set at
1 billion DAI to provide flexibility for future increases if
constraints change. In addition, MakerDAO recommends marginally
increasing the funds deployed in the 77% and 94.5% pools to 10
million DAI each to ensure sufficient pool size for “efficient
management of positions” and the calibration of interest rate
models. The recently unveiled Ethena points program for Season 2
introduces a $500 million cap on total eligible collateral for
incentives on Morpho. If demand for DAI borrowing through the vault
declines after this threshold is reached, the protocol states that
Multisig can reduce allocations below $600 million to maintain a
balanced supply/demand dynamic and align with expected collateral
returns. MKR Surges To Near Three-Year High MakerDAO’s native
token, MKR, hit a nearly three-year high of $4,074 on Sunday, which
is 40% below its current all-time high (ATH) of $6,292 in May 2023.
The token has pulled back nearly 2% and is currently trading at
$3,717. It is consolidating above its next support level of $3,640.
Despite the retracement, MKR still boasts significant gains over
longer time frames. It has posted a 25% gain over the past fourteen
days and an impressive 80% gain over the past thirty days.
Related Reading: Solana Price Could Explode By 80% If This Happens:
Crypto Analyst Demand for MKR tokens is evident as trading volume
has increased to $274,659,607 over the past 24 hours, a substantial
40% increase from just one day ago, according to CoinGecko data. In
addition, MKR’s market capitalization has seen a remarkable
increase of nearly 100% over the past month. Starting in
March with a market cap of $1.8 billion, as of the most recent
update on April 2nd, the market cap stands at $3.46 billion. This
significant increase underscores the high level of interest in the
MakerDAO protocol and its native token. Featured image from
Shutterstock, chart from TradingView.com
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