MakerDAO Initiates Massive $600 Million DAI Investment In USDe And sUSDe

MakerDAO, a decentralized finance (DeFi) protocol, is contemplating investing 600 million stablecoins of DAI into USDe and staked USDe (sUSDe) through Morpho Labs’ lending platform. This move aims to enhance risk control and boost incentives for users within the DeFi sector.

MakerDAO Sets Maximum 600 Million DAI Allocation

The Spark DAI Vault, introduced as a lending platform in 2023, saw significant interest shortly after its debut, as mentioned in MakerDAO’s post on their governance forum.

To maintain a desirable level of liquidity risk, MakerDAO recommends increasing the amount of DAI held in USDe pools. These pools are linked to Ethereum‘s ENA (Synthetic Dollar Protocol), allowing for swift redemption when needed.

By reassigning the funds, Ethena can keep a bigger portion of the earnings for its insurance pool. This could enhance the safety and risk quality of MakerDAO’s investment in Ethena.

MakerDAO advises directing future investments towards the 86% and 91.5% Loan-To-Liquidity-Value (LLTV) pools due to their superior efficiency in terms of borrow rates and user interest. The lower LLTV pools, including the 77% and 94.5% pools, will still receive investments but in smaller proportions compared to the two major pools.

To reduce the possibility of financial instability and improve the balance between risks and rewards, MakerDAO restricts the maximum amount of DAI in circulation to 600 million. Yet, the threshold for the Dividend Debt Mechanism is established at 1 billion DAI, enabling adjustments if necessary.

To enhance effective management of positions and interest rate model calibration, MakerDAO suggests adding 10 million DAI to both the 77% and 94.5% pools.

In simpler terms, the new Ethena rewards program for Morpho’s second season sets a limit of $500 million on the total value of assets that can be used as collateral for incentives. If the need for borrowing DAI using the vault goes down once this limit is exceeded, the protocol allows Multisig to decrease the collateral below $600 million to keep a healthy balance between supply and demand, and match anticipated returns on investments.

MKR Surges To Near Three-Year High

MakerDAO’s MKR token reached a nearly three-year peak of $4,074 on Sunday, representing a 40% drop from its all-time high of $6,292 in May 2023. Following a minor decline of around 2%, the token is now being traded at approximately $3,717. It remains stable above its upcoming support level, which is set at $3,640.

Even though MKR experienced a pullback, it has achieved substantial growth in the longer term. Specifically, it registered a 25% increase in value over the past two weeks and a remarkable 80% rise during the last month.

The interest in MKR tokens is clear with trading volume jumping to $274.66 million within the last 24 hours, marking a significant 40% rise compared to the previous day, based on CoinGecko’s latest figures. Furthermore, MKR’s market value has experienced a noteworthy surge of almost 100% in just one month.

From March onwards, the market value of MakerDAO was approximately $1.8 billion. However, as of the latest data on April 2nd, this figure has risen to a staggering $3.46 billion, reflecting the surging curiosity and investment in the MakerDAO protocol and its associated token.

MakerDAO Initiates Massive $600 Million DAI Investment In USDe And sUSDe

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2024-04-03 00:04