Here’s Why Investors Are Betting On MKR In The Crypto Market Crash

    • MKR rises by 25% with extreme trades as high as 85% up during the market crash
    • Maker’s resilience is due to its stablecoin stability and revenue outperformance versus other lending protocols

    Maker is having a laugh right now. While the rest of the crypto market weeps tears of red, Maker is in the green.

    Granted, MKR the native token of Maker is in the red, but there’s more to the lending and stablecoin protocol than a red day courtesy of the market momentum. Maker, unlike Terra, has a provable track record in the bear market, and it’s because of this very reason investors look to MKR as a stable bet in time of strife.

    Maker’s Green Day

    Earlier this week, while the rest of the market was up, MKR saw a 26% gain in less than 12 hours. What’s even more surprising was the wick which stretched to an 85% gain. MKR opened at $1,222, saw a high of $2,281 and closed at $1,540. In the next 12 hours, it fell by 27%, wiping away the excitement of the previous day.

    Source: MKRUSD via Trading View

    There’s a reason people are betting on MKR in the current market situation. This reason has to do with what’s happening with Terra as well as MKR’s resilience in a bear market.

    DAI Didn’t Die

    UST is (was) not the only algorithmic stablecoin. The first of its kind was DAI, issued by Maker and backed by Ethereum, USDC, and other cryptocurrencies. The difference between DAI and UST was the latter was completely collateralized by cryptocurrencies, and volatile cryptocurrencies at that.

    Do Kwon, the CEO of TerraForm Labs, the company behind Terra quite clearly suggested that DAI is the enemy of UST and Terra.

    Source: Twitter

    In 2022, UST not only surged past DAI but also BUSD to become the third largest stablecoin by market cap. Of course, all of this collapsed earlier this week when UST’s peg fell. This outperformance of DAI and the collapse of the only other algorithmic stablecoin gave impetus to MKR which is used to govern how DAI is backed.

    Investors looked at UST’s downfall as DAI’s victory and hence MKR’s victory as well.

    MKR’s Value During Bear Markets

    Maker has seen two bear markets already. After the 2018-19 bear market, few protocols like Maker, Chainlink, etc. survived. Maker’s survival was because of its lending base and of course the fact that it was behind the main stablecoin on the blossoming Ethereum ecosystem.

    Data from TokenTerminal suggests that since November 2021 (the crypto top), Maker’s revenue has declined the least compared to other lending protocols like – Aave and Compound.

    Source: TokenTerminal

    Since November 2021:

    • Maker daily revenue: Down 56%
    • Aave daily revenue: Down 70%
    • Compound daily revenue: Down 86%

    This is presumably because of the fortifiable nature of the protocol and most of its borrowing volume comes from stablecoins – USDC, DAI, and PAX.

    Maker’s resilience in the market is clearly there to be seen. This resilience is not just because of Terra’s downfall but because of its own stablecoin stability and lending base. The crypto community can’t sleep on MKR.

    Aakash Athawasya
    Aakash is a market analyst at Vauld. He looks at on-chain data of Bitcoin, ETH, and the macroeconomic effect of crypto on the equity and commodity markets.

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