The decentralized finance (DeFi) space is no stranger to the constant fluctuation of value locked in protocols. MakerDAO [MKR] was once the DeFi protocol with the largest total value locked (TVL) but has since been replaced by Lido Finance [LDO]. DefiLlama data shows that Maker’s TVL has continued to plummet, declining by 9% in the last month alone. In contrast, Lido has experienced a 4% TVL growth in the same period.
Lido’s TVL surpassed the $10 billion mark in March and has since continued its uptrend, currently sitting at $11.99 billion. Maker’s TVL, on the other hand, has only grown by a mere 17% in the past five months. The much-anticipated Ethereum Shanghai Upgrade went live on April 12th, causing a surge in liquid staking activity for Lido. While other staking platforms enabled withdrawals immediately upon Shapella’s implementation, Lido did not, resulting in more ETH deposits.
Per data from Dune Analytics, Lido-staked ETH has grown by 9% since Shapella, with its TVL increasing by 5%. Unfortunately, Maker’s TVL suffered a decline and subsequently stagnated due to the momentary depeg that its DAI stablecoin experienced in March due to the unexpected collapse of Silicon Valley Bank. USDC temporarily lost its parity to the dollar during this time, causing DAI’s supply to trend downward by 25%, according to data from Maker Burn.
As DAI supply drops, there are fewer DAI tokens in circulation, resulting in less demand for borrowing the stablecoin, which ultimately affects Maker’s TVL. This decrease in demand causes a decline in the amount of collateral locked in Maker’s smart contracts, causing its TVL to experience stunted growth.
MKR’s price has posted a double-digit decline in the last 30 days, according to data from CoinMarketCap, currently trading at $653.16. On-chain data from Santiment revealed that the altcoin also suffered a blow to its network activity during that period. The count of daily active addresses that traded MKR in the last month fell by 43%, and new demand for the altcoin dropped as the count of new addresses created daily to trade MKR fell by 32%.
Santiment data also showed that MKR’s supply on exchanges grew steadily in the last 30 days, while its supply outside exchanges fell. This meant more investors sent their MKR holdings to exchanges to sell them, causing a decline in the altcoin’s value.
In summary, while Lido Finance’s TVL continues to grow, MakerDAO’s TVL is declining due to the depeg of its DAI stablecoin, which has caused a decrease in demand and ultimately affected Maker’s TVL. MKR’s price has also suffered a double-digit decline in the last 30 days, with a drop in network activity and new demand. As always in the DeFi space, protocols must stay vigilant and adapt to the constant changes in the market to stay ahead.