A comprehensive look through the 2022 Financial Results for the Decentralized Finance (DeFi) stablecoin platform MakerDAO indicates that the firm’s earnings and revenue plummeted significantly from that of the previous year. This was the same year when the DeFi protocol made a U-turn from crypto-native lending to the real-world asset market.
Although the MakerDAO platform ended 2022 with a positive figure, it was obvious that the troubles encountered by the crypto lending ecosystem had imparted the protocol negatively.
“Despite these challenges, the protocol pioneered groundbreaking new exposures to real-world assets (RWA), setting the stage for further diversification of Dai collateral types. We believe this activity is essential to ongoing efforts to diversify the collateral backing and sustainability of Dai,” MakerDAO said in a statement.
In 2021, the protocol ended up with total revenue of 112 million DAI but in 2022, its total revenue was around 65 million DAI which marked a 42% decrease. These figures contributed to an 80% reduction in net protocol operating earnings, from 90 million DAI in 2021 to 19 million DAI in 2022. Another major contributor to its reduced net operating earnings was a massive increase in operating expenses from 21 million DAI in 2021 to 46 million DAI in 2022.
As against the 9 billion DAI recorded as overall Dai balances in 2021, MakerDAO had a 5 billion DAI shrunk value instead. This was approximately a 43% decrease from the year before.
The DeFi protocol attributed this reduction to certain challenging market conditions including “macro environment, interest rate hikes by central banks and a tremendous deleveraging in crypto due to the irresponsibility, misconduct and inappropriate risk management by large investors and centralized financial intermediaries.”
Terraform, FTX Influence Market Position
Notably, the collapse of Terraform Labs and Bahamian-headquartered crypto exchange FTX were considered part of the challenging events encountered by MakerDAO. Similar to other firms, MakerDAO received a fair share of the market downtrend.
Before the liquidity crunch of FTX and the resignation of the exchange’s Chief Executive Officer (CEO) Sam Bankman-Fried, MakerDAO announced plans to invest $500 million in investment-grade corporate bonds and short-term United States treasury bonds. Specifically, $400 million of the organization’s asset reserves were planned to be invested in US treasury bonds and $100 million invested in business bonds.
