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MakerDAO revenue fell 42% in 2022 amid shrinking crypto lending market

Quick Take

  • MakerDAO’s earnings and revenue fell sharply in 2022 from the previous year.
  • Real-world assets grew to become a major part of MakerDAO’s earnings as 2022 ended.

MakerDAO, which builds the platform that issues the DAI stablecoin, saw a marked decline in 2022 revenue, as the DeFi protocol launched a significant pivot from crypto-native lending to the real-world asset market, according to a financial report issued by Steakhouse Financial.

Total revenue decreased 42% to 65 million DAI ($65 million) in 2022 from 112 million DAI in 2021, the report said. This led to an 80% drop in the protocol’s net operating earnings to 19 million DAI last year from 90 million DAI in 2021. Operating expenses rose to 46 million DAI in 2022, more than double the figure reported the previous year.

MakerDAO’s decreased earnings followed the general crypto downturn of 2022 in which the market experienced a massive deleveraging cycle triggered by collapses of the Terra ecosystem and the FTX exchange — events that occurred amid a significant slowdown in the global financial markets and impacted both centralized and decentralized participants in crypto lending.

Maker’s total balance shrunk to 5 billion DAI at the end of 2022, a 43% decline from the 9 billion at the end of the previous year, according to Steakhouse.

Maker’s growing real-world asset exposure

MakerDAO engineered a significant shift in DAI economics last year that saw a pivot to real-world asset backing. The Maker protocol issues the DAI stablecoin, which users mint in exchange for approved collateral assets that are supplied in excess of the amount of DAI being minted.

The volume of Maker’s real-world asset vault balance grew to 640 million DAI at the end of 2022. This figure marks a 37-fold increase from the end of 2021, with a large portion of the growth occurring in the last half of 2022 including a 500 million DAI vault for Monetalis Clydesdale and a 100 million DAI vault allocation for Huntingdon Valley Bank.

The impact of Maker’s real-world asset push can also be seen in its revenue-generation matrix, with the vaults accounting for 70% of MakerDAO’s gross revenue in December, according to the report. That’s despite the fact that the vaults only accounted for a tenth of the DAI minted over the period.