Crypto Loans Surpass RWA as Main Revenue Drivers for MakerDAO

The crypto sentiment seems to have flipped bullish after last year’s gains, and one MakerDAO data point may suggest that optimistic leveraged bets are making a comeback.

The data point in question is MakerDAO’s revenue matrix and the fact that crypto-backed loans are now the DeFi protocol’s biggest revenue contributor above Maker’s much-vaunted real-world asset (RWA) vault.

There and Back Again: DeFi-native Loans

DeFi-native loans now make up 50.1% of MakerDAO’s projected $243 million annual revenue, according to data from crypto-native financial reporting and analytics firm Steakhouse Financial’s MakerDAO dashboard on Dune.

Crypto-backed lending now stands at $2.4 billion for the DeFi powerhouse, the data shows, and is projected to deliver $122 million in revenue, exceeding the protocol’s RWA vault, which comes up to only $107 million in annual revenue estimates.

Crypto lending, being Maker’s main revenue driver, is a return to familiar surroundings for the project. Before its RWA push last year, DeFi-native lending delivered up to $200 million in annual revenue during DeFi’s last peak period in 2021.

Since then, DeFi lending suffered a major slump as the crypto market endured a major bear winter that saw a massive deleveraging event across two big crashes — the Terra Luna collapse and the FTX blowup.

DeFi protocols like Maker and Aave that played it safe seem to have weathered the storm that saw smaller players wither away, with some even shuttering their services.

Now, it seems crypto loans are making a comeback amidst the market renaissance of last year that saw crypto’s market capitalization double to $1.7 trillion. This growth could mean a return of the appetite for risky long bets on future crypto prices, which is being represented by the surge in demand for crypto-backed loans.

But why do crypto loans by Maker form a bellwether for the bullish sentiments? Well, Maker loans its DAI stablecoin, and the asset class is a major liquidity driver for trading. Crypto loans accounting for more than half of Maker’s revenue indicates that sentiment has flipped bullish and traders need more loans to earn higher yields that characterize a bull market.

Maker Making Money From RWA and Crypto Loans

A flip towards risk-on assets may also show that market participants are expecting rate cuts by the US Federal Reserve and see little reason to park their funds in US treasury bills when the DeFi rate is tending towards double-digit yields.

However, MakerDAO’s earning potential continues to thrive and is independent of whether DeFi rates are higher or lower than US-fed interest rates.

As previously reported by CryptoPotato, Maker injected $100 million worth of RWA through BlockTower Andromeda, most of which was allocated to short-term US Treasury bonds.

The addition is part of the protocol’s “Endgame” plan introduced by founder Rune Christensen, part of which seeks to increase investment in RWA further and also decentralize its DAI stablecoin backing.