Research Summary
The report from Ouroboros Capital provides an update on Maker (MKR), highlighting its recent performance and the effectiveness of the Dai Savings Rate (DSR). The report also discusses the potential for DAI supply growth and the large total addressable market (TAM) for sDAI.
Key Takeaways
MKR’s Recent Performance
- MKR Outperformance: MKR has been testing new highs, with a 32% increase in 42 days. This outperforms both Bitcoin and Ethereum, which have seen decreases in the same period.
- Anticipation of Dip Buyers: The report anticipated dip buyers stepping in due to MKR’s strong value accrual in an environment where front-end rates are expected to stay high.
- Long Term Bullish View: Despite taking some profits at the current level, the report maintains a long-term bullish view on MKR.
Effectiveness of DSR
- DSR Fulfilling Objectives: The DSR has been successful in raising awareness of sDAI as the preferred on-chain venue to access US Treasury yields and stimulating the generation of new DAI.
- Higher DAI Supply: Higher DAI supply through sDAI deposits is expected to lead to higher profits in the long run.
- DSR Transition to Tier 3: The report suggests that the DSR will soon transition to Tier 3, where the rate would be calibrated at 4.1%. This shift would make new creation and deposits of DAI into the DSR profit accretive for MKR.
DAI Supply Growth and TAM for sDAI
- DAI Supply Growth: DAI supply has been growing at $250-$290mn per month over the past 3 months, implying a supply growth of at least $3bn per year.
- Profit Compounding: Assuming all $3bn of DAI growth is deposited into sDAI at the 4.1% rate (Tier 3) and yield is generated at 4.5% (BlockTower Andromeda), it would imply an incremental profit of $11.95mn per year.
- Large TAM for sDAI: The report suggests that the adoption of sDAI has yet to see a hockey stick moment and that DAI’s current market cap of $5.5bn is still miniscule compared to the global demand for on-chain US Treasury yields.
Actionable Insights
- Investigate the Potential of MKR: Given its recent performance and the bullish outlook presented in the report, MKR may be worth further investigation.
- Monitor DSR and DAI Supply Growth: The effectiveness of DSR and the growth of DAI supply could have significant implications for MKR’s future performance.
- Consider the Large TAM for sDAI: The large total addressable market for sDAI suggests potential for significant growth in the future.
