MakerDAO: How RWA holdings contributed to profits amidst stablecoin saga

MakerDAO: How RWA holdings contributed to profits amidst stablecoin saga

March 16, 2023

By Himalay Patel

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MakerDAO’s RWA holdings led to profits amid stablecoin market issues.

Protocol maintains stability but faces a decline in unique users.

The stablecoin market faced a significant challenge as USD Coin [USDC] came under scrutiny. MakerDAO, the protocol behind stablecoin DAI, also felt the impact. But despite this, MakerDAO saw profits, thanks to its RWA holdings.

According to data provided by Delphi Digital, MakerDAO made a $3.8 million profit through its RWA holdings. These holdings contribute significantly to MakerDAO’s overall earnings, making up 11.6% of its total holdings. Real World Asset (RWA) is a type of collateral that is not cryptocurrency-based but is more traditional and tangible, such as U.S. Treasury Bills and Bonds.

Having a closer look

However, MakerDAO’s PnL statement painted a negative outlook due to high expenses on upgrades and updates. A significant portion of MakerDAO’s earnings are possibly being spent on upgrading and maintaining the protocol. These expenses outweighed their earnings, leading to a net loss for MakerDAO.

Nonetheless, MakerDAO’s recent proposal to create PSM circuit breakers shows its dedication to improving its protocols, considering the market’s volatility. This proposal will allow Maker governance to disable a PSM immediately without governance delay. This step will ensure that the protocol can react quickly to market changes and maintain stability.