Wrapped BTC And Ether Woes Have Caused Makerdao’s Revenue To Dip By 86%

MakerDAO, the Maker Protocol’s governing body has recently shared its revenue for the third quarter. As per the officials, the company’s revenue has faced a tremendous plunge in the particular quarter.

MakerDAO Shares Revenue for Q3 2022

MakerDAO officials have reported that they have recorded a great fall in demand in a few liquidations and loan demand. On the other hand, their expenses have not gone down but have moved upwards.

Johnny TVL, “The State of Maker Q3 2022”’s co-author and a Messari analyst, MakerDAO’s revenue has recorded a great plunge.

In terms of figures, the revenue generated by the decentralized autonomous organization for the third quarter was just $4 million. Compared to month-over-month performance, MakerDAO’s revenue plunged by 86%.

As per the analyst, this is for the first time since 2020 that MakerDAO has recorded a net income loss in a quarter. TVL also highlighted weak loan demand and fewer liquidations as reasons for low revenue.

Poor Performance of Biggest Earners

The major dip in MakerDAO’s revenue has come from the slump recorded for Wrapped Bitcoin (wBTC) and Ether (ETH). Both digital assets were considered the biggest earners and top revenue contributors.

Unfortunately, their demand has plummeted in the recent quarters and the third quarter was the worst of them all. A tremendous drop has been recorded in revenues generated from both digital assets.

According to data, Wrapped BTC has recorded a 66% fall in revenue in the third quarter. Whereas, Ether has recorded a 74% drop in revenue in the same quarter.

This is a great slump, which clearly indicates a massive demise of the cryptocurrency markets across the board.

Usage of wBTC and ETH

Both digital assets were the top picks among the investors aiming to use them as collaterals when acquiring Dai stablecoin as loans.

MakerDAO has also revealed that they have also recorded a great fall in the collateral ratio. Previously, the collateral ratio on the platform was 1.9 but now, it has dropped to 1.9.

Expenses Remain High

MakerDAO added that despite the low revenue generation, their expenses have continued to remain in the higher tier. In order words, the expenses have proven that they are not so elastic.

The company has reported that for the third quarter, they have only recorded a 16% fall in expenses compared to the previous quarter. In the third quarter, their total expenses amounted to $13.5 million.

MakerDAO Wants to Increase its Returns

MakerDAO is trying its best to deal with the situation at hand and wants to increase returns from the assets that the borrowers can deposit as collateral.

For this purpose, MakerDAO has initiated a process that would see them invest in bonds and treasuries. MakerDAO is aiming to invest up $500 million in bonds and treasuries.