Growth of MakerDAO’s DAI Market Cap Driven by Increased Interest Rate
The market cap of MakerDAO’s decentralized stablecoin DAI has increased by almost $1 billion in the last seven days. This growth can be attributed to the DeFi protocol’s introduction of an increased interest rate, aimed at attracting more users. DAI’s market cap rose from $4.45 billion to $5.33 billion, according to CoinMarketCap data.
- MakerDAO founder Rune Christensen increased DAI’s interest rate to 8% to incentivize more holders to use the DSR mechanism.
- The number of decentralized stablecoins in the DSR contract immediately rose from 339.4 million to 1.27 billion.
- The growth is significant considering the high yield rate is unavailable to U.S. residents and VPN users.
DAI’s Adoption Impact on MakerDao’s MKR Governance Token
Despite DAI’s increased adoption, MakerDao’s MKR governance token did not experience a positive impact. The digital asset slightly declined by 1.24% over the past week, reaching $1,228. However, MKR has been one of the best-performing cryptocurrencies in the past month, rising by nearly 40%. This outperformance is notable considering the muted performance of Bitcoin and Ethereum due to current market conditions.
- MKR has seen strong buying activity from large MKR holders, leading to its double price increase in the past three months.
Competition Heats Up in Stablecoin Market Despite Declining Supply
The introduction of the PYUSD stablecoin by PayPal has intensified competition in the already saturated stablecoin market. Dominant stablecoin issuers, Tether and Circle, welcome this competition as they hope it will further boost global adoption of stablecoins. However, the stablecoin market capitalization has been declining rapidly. Last month, the total market cap of stablecoins reached its lowest level since August 2021.
Hot Take: MakerDAO’s DAI has experienced significant growth in market cap due to its increased interest rate. However, this growth has not positively impacted the MKR governance token. The stablecoin market is becoming more competitive, with PayPal entering the space, but the overall market capitalization is declining. It will be interesting to see how these dynamics evolve in the future.
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