Methodology

MakerDAO is a decentralized autonomous organization which has developed the Maker Protocol that utilizes a two-token system. DAI is a multi-collateral-backed stablecoin that acts as the first token. MKR is a governance token that acts as the second token which is employed by stakeholders to maintain the system.

The price of DAI is pegged to the U.S. dollar and the new version of Maker Protocol allows DAI to be multi-collateral which means it can accept any Ethereum-based asset as collateral. These collaterals are deposited into smart-contract vaults whenever a new DAI is minted

The required data for this analysis were collected from the ez_token_transfers table of the ethereum_core schema and the erc20_balances table of the old ethereum schema. To query the proper data aimed for this analysis, some assumptions were made which are as follows:

• The 0x0000000000000000000000000000000000000000 address is considered as the DAI minting address and others are labeled as only transfer.
• To measure the collaterals put on the MakerDAO vaults, addresses labeled maker were collected from the dim_labels table and joined to the ez_token_transfers table. Then, the U.S. dollar volume of tokens transferred to these addresses was used to measure the collaterals.

Analysis

The comparison of DAI USD balance and MakerDAO's cumulative collaterals has demonstrated that DAI has had a healthy increase in its balance while its cumulative collaterals have increased on a much higher scale. Even recently with the latest market downtrend that caused a decrease in the DAI balance, its collaterals continue rising which reduces the long-term stability risks of the token.

Analyzing the DAI minting volume has shown a steady trend over the years with a daily volume of below 1B tokens per day. There has been only one time which the minting volume increased to above 1B tokens per day which was the end of 2021. It can be regarded as the end of the last major uptrend in the whole crypto market and the transition to the current downtrend.

As it is shown in the figure below, ETH is the major asset to be used as collateral on MakerDAO due to the fact that before MakerDAO makes DAI multi-collateral, only ETH was used as collateral. Other than WETH with about 50% of the collaterals share, USDC has accounted for almost one-third of the collaterals, WBTC has a share of around 15%, and DAI itself has around 2% of all the collaterals. Other assets have a share of less than 0.5%.

The daily minting volume vs. the daily collaterals added to the protocol also shows that almost for the entirety of the token's lifespan, its minting volume was below its collateral volume except for one period in late 2021.

Last but not least, the simultaneous analysis of DAI balance, DAI minting volume, and MakerDAO's cumulative collaterals volume shows that although the minting volume has preserved a steady amount, as the DAI balance increased its collaterals increased massively which indicates a strong backbone for the stablecoin.

Conclusion

By relying on the above analysis, it can be concluded that the DAI's minting volume heavily relies on the overall crypto market sentiment. As the market became bullish in the second half of 2021, the minting volume immensely increased. On the contrary, as the market enters a period of correction and downtrend since the beginning of 2022, both the minting volume and the balance of DAI have decreased. On the other hand and regardless of the market, MakerDAO's collaterals continue to rise steadily while it has started the 2022's second quarter with almost $50B as the collaterals mainly consisted of WETH, USDC, and WBTC.