[Despite DAI challenges, MakerDAO’s Spark protocol still dominates lending market]

The MakerDAO protocol has successfully overcome market challenges, thanks to the increased user activity brought about by the Spark protocol. The Spark protocol, a money market focused on DAI that aggregates liquidity from MakerDAO, accounted for 10% of the lending market last month, with $629 million in active loans. This dominance has significant implications for DAI and MKR, potentially shifting market dynamics toward other lending protocols.

The supply of DAI has dropped significantly since May 2021, from 5.6 billion at the end of October to 5.3 billion currently. This reflects that people may be looking for high yields in other stablecoins rather than DSR. Despite continued usage of wsETH and ETH vaults, increased borrowing from the Spark protocol has increased Ether's debt. Additionally, DAI exposure in WBTC core vaults has also grown.

As the supply of DAI decreases, the liquidity ratio of the stablecoin decreases, which is a worrying sign. Maker may need to consider taking action if liquidity deteriorates or if borrowing rates are modified.

On the other hand, Maker’s native coin MKR is performing well in the market and is currently trading at $1,460, up 0.23% recently and up 7.50% over the week. However, the decrease in new MKR addresses indicates declining interest in the cryptocurrency, and the MakerDAO team needs to innovate more to maintain the stability of the project.

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