MakerDAO's Bold Move Into Traditional Assets Fuels MKR Token Surge
07/31/2023 20:31
MKR token has more than doubled since mid-June and is still quite bullish as MakerDAO turns to traditional assets to diversify portfolio.
MKR investors, who invested in the governance token of decentralized lender MakerDAO in June 2022, are now profiting from a cautious risk. Amid the cryptocurrency market’s turbulence, MakerDAO decided to back its DAI stablecoin with conventional assets like short-term US Treasuries and corporate bonds. This unusual strategy has produced excellent results, Bloomberg reported. The token has surged 55% in July alone this year and is trading at $1278,82, at the time of writing.
MKR’s remarkable success in a volatile market might be attributed to MakerDAO’s deliberate choice to diversify its investment holdings. MKR’s value has more than doubled since mid-June, increasing along with the lender’s preference for conventional assets.
According to Dune Analytics’ dashboard, MakerDAO currently has a sizable $2.5 billion in traditional assets or just over half of its overall holdings. Given that it doesn’t charge interest on its dollar-pegged stablecoin DAI and that 10-year Treasury yields are now hovering around 4%, MakerDAO is benefiting from an expanding net interest margin.
This surplus, according to Messari research analyst Kunal Goel, has made it possible to purchase back MKR tokens worth about $7.5 million per month. In his quote, he emphasizes that “MakerDAO pays no interest on most of the DAI supply, but its portfolio of real-world assets and productive crypto loans are generating yields of around 4%.”
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Will MKR Continue Bullish Momentum?
Investors keep a careful eye on Maker’s governance decisions as it continues to develop the DAI ecosystem, as well as how the market reacts to the improved interest rate mechanism. The success of the Enhanced Dai Savings Rate (EDSR) proposal could spur additional DAI price and adoption and increase the market’s overall liquidity. If the bullish sentiments continue, the MKR token could break the $1,300 point.
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