MakerDAO (MKR): Will DAI adoption improve with the new protocol?

  • MakerDAO’s new protocol can help improve DAI adoption.
  • Selling pressure on the MKR has increased as the MVRV index has risen.

Messari, in a February 22 tweet, announced the launch of MakerDAO’s new vertically integrated marketplace called Sparks Lend. The main objective of the market will be to improve the adoption of DAI.

Read Maker (MKR) price forecast 2023-2024

Spark Lend’s association with Maker would allow users to borrow DAI at the 1% DSR variable rate. Spark Lend utilizes Maker’s DAI Direct Deposit Module (D3M) and PSM to directly regulate the supply of DAI in its market.

The next step for this protocol would be to integrate its services with L2 solutions, which would help make DAI more popular.

If DAI adoption increases, it could improve the revenue generated by MakerDAO. At the time of this writing, the income generated by MakerDAO, especially through the interest generated by stablecoins, is decreasing. Most of the revenue generated by the protocol depended on its investments in real-world assets (RWA).

Source: Dune Analytics

Whales find their MKR

This new update could also be one of the reasons whales’ interest in MKR has increased, as the percentage of large addresses with MKR has grown in the last month, according to Santiment.

However, its velocity continued to decline, implying that the frequency at which MKR was trading dropped. Along with this, the overall growth of the MKR network has also slowed down. This suggested that new addresses were not particularly interested in buying MKR.

Source: Sancimento

One reason for the same could be the MKR’s high MVRV ratio, which implies that holders would make profits if they sold at the time of writing. As the long/short ratio is negative at the time of publication, this implies that most MKR holders are short-term.

Source: Sancimento

Realistic or not, here is the market cap of MKR in terms of BTC

However, if these short-term addresses ended up selling the MKR at the time of writing, it would bring the price of the MKR down considerably.

In recent years, Tether (USDT) and USD Coin (USDC) have been the stablecoins of choice for users dealing with DeFi. These stablecoins have captured the vast majority of the market and left other stablecoins such as DAI behind.

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