Research Summary
This report discusses the recent trends in the DeFi and NFT analytics sector, focusing on the outperformance of the RWA sector. It highlights the growth of tokenised US treasuries like OUSG and the conversion of stable coins into tokenised treasuries. The report also discusses the success of MKR’s sDAI and its strong first-mover advantage in the market.
Key Takeaways
Growth of Tokenised US Treasuries
- Emergence of off-chain yield sources: Amid a lack of attractive on-chain yield sources, off-chain sources of yield have become a rare source of growth, particularly tokenised US treasuries.
- Continued inflows into OUSG: Products like OUSG (Ondo Short-Term U.S. Government Bond Fund) are experiencing continued inflows, indicating a growing interest in tokenised treasuries.
- Conversion of stable coins: The lack of demand for leverage in on-chain money markets has made deploying stable coins into off-chain assets relatively attractive, leading to a steady conversion of stable coins into tokenised treasuries.
Success of MKR’s sDAI
- Strong traction of sDAI: MKR’s sDAI has shown strong traction with over $1bn DAI of inflows following a rate increase to 5% and the launch of sDAI on Spark.
- First-mover advantage: MKR continues to enjoy a strong first-mover advantage having invested over $2bn in short-term bonds through off-chain structures since February 2022.
- Outperformance of MKR: The success of sDAI and a constant flow of MKR buybacks has led to continued MKR outperformance relative to its DeFi 1.0 peers.
Future Trends
- Emergence of similar products: Other entities like Frax are looking to implement something similar to sDAI, indicating a potential trend in the market.
- Challenges for smaller projects: Smaller projects like Ledgity have struggled to generate meaningful TVL, highlighting the challenges faced by new entrants in the market.
- Widening participation: While betting on the leader (MKR) has yielded the best returns, the report suggests not discounting widening participation from RWA-adjacent coins.
Actionable Insights
- Monitor the growth of tokenised treasuries: Given the continued inflows into products like OUSG, it may be beneficial to keep a close eye on the growth of tokenised US treasuries.
- Consider the potential of sDAI: With the success of MKR’s sDAI, it may be worth investigating the potential of similar products in the market.
- Watch for widening participation: As the report suggests not discounting widening participation from RWA-adjacent coins, it may be beneficial to monitor the performance of these coins.
