MakerDAO's Decentralized Finance Dominance Keeps Sliding Towards 50%

Michael LaVere
  • MakerDAO constitutes 56% of the decentralized finance marketplace, down from 90% at the start of 2019
  • Increased competition and rising interest rates has likely led to the fall in dominance. 

MakerDAO, a decentralized autonomous platform within the Ethereum blockchain, has continued to see its dominance in the decentralized finance (DeFi) space drop. 

Maker's Fall in DeFi Dominance

According to data supplied by DeFi Pulse, MakerDAO is sliding towards a 50% market share in decentralized finance, compared to the 90% dominance it held in the space at the beginning of 2019. Of the total value locked into DeFi, only 56% of it belongs to crypto deposited into MakerDAO. 

In a report by The Defiant published on Aug. 22, falling market dominance for Maker is explained as a result of rising interest rates and competition.

According to the report, MakerDAO interest rates for ether-backed Dai loans have risen from 9.2% at the start of the year to 20.5% . The effect has been to “incentivize users to close out loans and diminish Dai supply to keep the 1-to-1 peg with the dollar.” Given the falling capital deposited in Maker, it appears that the interest rate adjustment is working. 

The Defiant also cites rising competition from lending platforms impacting Maker’s market share. Compound, in particular, has been beating Maker in new loan creation since the start of July. The report also indicates that Maker is trending towards third place in new loan creation for the month of August, behind Compound and dYdX. 

Defiant’s report speculates that the implementation of multi-collateral Dai could boost MakerDAO’s market share once again, if the platform decides to allow for the use of multiple tokens as collateral instead of just ETH.