Despite Maker Being One of the Highest Revenue-Generating Protocols, Its Governance Token MKR Has Been Among the Worst-Performing Cryptocurrencies Over the Last Seven Days

MKR's price fell almost 40% from Aug. 1 to Aug. 5, but has only rebounded slightly since then. Despite MKR's token performance, the protocol has generated $6.9 million in fees in the last week, the fourth-highest for an application

Maker (MKR) has seen a weaker rebound compared to other cryptocurrencies following the recent market selloff, with MKR being down 20% over the past seven days.

This is despite Maker being one of the highest revenue-generating protocols, with $6.9 million in fees being generated in the last week.

Several factors could be contributing to MKR's weaker rebound, including people front-running trades when MKR saw intense growth last month, causing the token to rise from around $2,000 to $3,000 from July 7 to 16.

On July 16, Maker founder Rune Christensen shared a post highlighting new features to an overhaul of Maker’s tokenomics called Maker’s Endgame which was first announced in 2022 and is now nearing launch.

As a result, people not only had open trading positions in MKR but were also shilling the token on social networks.

“Typically trades like this — when a [big] event is far out and gets front-run really hard, the selloff is just as brutal and it takes a while to become a performer again,” Cai said.

Another factor that could be impacting MKR's performance is the expected interest rate cuts coming from the U.S. Federal Reserve in September.

Even though rate cuts are typically considered bullish for riskier assets, the expected September cuts put downward price pressure on MKR because they lower the borrowing costs of capital, Cai said.

MakerDAO has several streams of revenue, but the primary source one is the fees that users pay when borrowing DAI, Maker’s decentralized stablecoin, against their collateral.

For example, one of Maker’s vaults generates over $84 million in revenue annually, according to an Artemis research report that was published on July 30.

“When rate cuts come, the expectation by people is that stability fees, Maker’s interest rate payments it charges its users, go down, because less people would borrow on Maker,” Cai told Unchained. “That’s the biggest risk to the lending-borrowing protocol.”

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