Behind MakerDAO's 8% high-yield DAI deposits: RWA asset-driven and temporary promotional strategies

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Recently, MakerDAO adjusted the deposit interest rate of DAI in its lending protocol Spark Protocol to 8%, a stablecoin "risk-free rate" that exceeds the yield of US Treasury bonds, which has attracted widespread attention in the market. Many cannot help but question whether there is a Ponzi model risk behind such high returns?

Where does this 8% "risk-free" return actually come from? Is it sustainable? What is the purpose of MakerDAO taking this action? These questions are worth exploring in depth.

Is DAI's 8% excess "risk-free interest rate" a Ponzi scheme?

In fact, MakerDAO's introduction of a large number of real-world assets (RWA) has recently been the focus of industry discussion. By incorporating RWA assets, MakerDAO aims to diversify the assets that back it and utilize the long-term additional yields brought by US Treasury bonds to stabilize the DAI exchange rate, increasing the elasticity of issuance. At the same time, this also helps to reduce DAI's dependence on certain assets, thereby decreasing single-point risk.

According to statistics from the data platform, RWA assets account for more than half of the MakerDAO protocol's balance sheet. These interest-bearing RWA assets have brought considerable revenue to MakerDAO, most of which comes from U.S. Treasury bonds, enjoying an almost 5% risk-free Intrerest Rate. It is worth noting that this revenue ultimately goes into MakerDAO's accounts, rather than to DAI holders.

Is the 8% excess "risk-free Interest Rate" of DAI a Ponzi?

So, the source of the 8% yield becomes clear: the MakerDAO protocol generates significant profits from RWA interest-bearing assets, and then uses these profits to pay the 8% interest. According to the explanation by the founder of MakerDAO, the purpose of setting the yield at 8% is to increase demand for DAI and the DSR (Dai Savings Rate), ensuring a continuously growing user base participating in SubDAOs and engaging in other Endgame plans.

In short, this initiative aims to increase the demand for DAI. More DAI means more collateral, which can be used to purchase more RWA yield-bearing assets, ultimately resulting in greater returns. On the other hand, this also helps to advance the Endgame plan, which is the vision set forth by MakerDAO to achieve complete decentralization.

Is DAI's 8% excess "risk-free Interest Rate" a Ponzi scheme?

However, is this 8% interest rate sustainable? The answer is no. In fact, this 8% rate is a one-time "promotional event". MakerDAO has introduced a new mechanism: Enhanced Dai Savings Rate (EDSR), which is a temporary way to increase the effective DSR available to users in the early stages of low DSR utilization.

Is DAI's 8% excess "risk-free Interest Rate" a Ponzi scheme?

In simple terms, it means attracting users with a one-time high interest rate when there are not many users earning interest in the early DSR. EDSR will be determined based on DSR and DSR utilization rate, and will gradually decrease as the utilization rate increases, until it ultimately disappears when the utilization rate is sufficiently high. EDSR is a one-time, unidirectional temporary mechanism, meaning it can only decrease over time, and cannot be increased again even if the DSR utilization rate declines.

Is DAI's 8% excess "risk-free Intrerest Rate" a Ponzi?

According to the founder of MakerDAO, when the usage rate of the DSR reaches 50%, this excess Interest Rate will disappear, and MakerDAO will never incur losses. In other words, MakerDAO is actually distributing part of the protocol income to DAI holders.

Is DAI's 8% excess "risk-free interest rate" a Ponzi scheme?

Overall, MakerDAO has achieved considerable returns by purchasing a large amount of RWA assets, then adjusting the Intrerest Rate to 8% and allocating part of the profits to DAI holders to increase the demand and user base for DAI. Once the number of users earning interest reaches a certain scale, this Intrerest Rate will gradually decrease until it returns to normal levels.

Is DAI's 8% excess "risk-free interest rate" a Ponzi scheme?

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WhaleStalkervip
· 13h ago
Another wave of Be Played for Suckers is coming.
View OriginalReply0
ExpectationFarmervip
· 07-28 22:35
Be Played for Suckers have learned to package themselves.
View OriginalReply0
0xSoullessvip
· 07-28 22:34
It's that time again for the suckers to celebrate the promotional season.
View OriginalReply0
MEVHuntervip
· 07-28 22:28
kek rwa yield farming szn is back... just another temporary pump n dump
Reply0
StakeTillRetirevip
· 07-28 22:25
It's temporary, so what's the point of it being good?
View OriginalReply0
AirDropMissedvip
· 07-28 22:23
It's gone after it heats up. It's the old trap.
View OriginalReply0
PermabullPetevip
· 07-28 22:10
Promotions are really full of traps.
View OriginalReply0
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