It has been a rough few weeks for the cryptocurrency market. The price of Bitcoin (BTC) is nowhere near the price estimates of most analysts, multiple stablecoins have lost their pegs, and the demise of one of the top decentralized finance (DeFi) platforms has sparked an event that saw $900 billion siphoned from the cryptocurrency disappeared from the total market capitalization.
Amid widespread repercussions, MakerDAO (MKR) managed to turn a crisis into an opportunity, while the debacle of TerraUSD (UST) brought renewed attention to DAI, the longest-running decentralized stablecoin.
Data from Cointelegraph Markets Pro and TradingView shows that MKR rose 66.2% from a low of $952 on May 12 to its current price of $1,587 as Terra (LUNA) price accelerated from May 9 to May 12.
Three possible reasons for MKR’s reversal of momentum include DAI maintaining its peg during the recent market turmoil, using the MakerDAO vault to fund supply chain shipping, and adding pledged ether (ETH) as a form of collateral to mint DAI.
DAI holds steady amid strong market turmoil
One of the most important factors giving investors more confidence in the MakerDAO ecosystem is the fact that DAI has maintained its peg to the US dollar in a volatile market, with some of the most popular stablecoins losing their peg.
DAI demand has contracted sharply by 25% over the past few days, but the anchor remains rock solid thanks to Peg Stability Modules.
Stacking DAI demand into PSM during bull markets gives DAI holders peace of mind even during the toughest weeks. pic.twitter.com/XGEYndBP05
— hexonaut.eth @ Permissionless (@hexonaut) May 12, 2022
The price of DAI fluctuated from a low of $0.9961 on May 11 to a high of $1.0046 on May 12 during the period of intense volatility, and is currently trading at $0.9994.
DAI has held steady despite the over 2.2 billion DAI supply reduction, which may give investors more confidence, especially after Tether (USDT) briefly touched a low of $0.9704.
Real-world adoption continues
Another factor driving MKR is its growing popularity in the real world. Most recently, the MakerDAO vault was used to fund the shipment of Australian beef, and other “use cases” are being planned.
Maker Vault was used to finance the shipment of Australian beef from Brisbane to Hong Kong.
On top of that, the entire operation is currently being tracked using the blockchain traceability solution @Mastercard Provenance.
this is possible
— Maker (@MakerDAO) May 10, 2022
On May 9, the MakerDAO vault was combined with decentralized asset financing protocol Centrifuge to allow trade finance provider ConsolFreight to mint DAI used to finance transactions.
A non-fungible token (NFT) containing shipment and invoice data was also minted in the process for tracking purposes and to help keep transaction records. The shipment is also being tracked using Provenance, Mastercard’s blockchain traceability solution.
The deal helps demonstrate one application of smart contracts and stablecoins in the supply chain industry.
Staking Ether as collateral
Another factor powering MakerDAO is the addition of support for staking Ether as a form of protocol collateral.
sETH2 allows those who participate in staking on the Ethereum BNB chain to obtain funds that would otherwise be locked for an unknown period of time and use them to earn yields in DeFi.
The collapse of UST, its knock-on effects, and the addition of ether as collateral have made MakerDAO the top DeFi protocol by total value locked (TVL), according to Defi Llama.
MakerDAO took the top spot after the TVL of Curve, another popular stablecoin liquidity protocol, fell from $19.32 billion on May 5 to $8.71 billion on May 16.
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