DeFi

Can Maker’s ‘world-first’ move merge DeFi with traditional banking

Maker was one of many most-discussed altcoins of the week. The Decentralized Finance protocol proposed the transfer of integrating the normal banking system into its ecosystem.

The response being overwhelmingly optimistic may open doorways for a lot of extra related situations.

Maker goes massive

The MakerDAO group just lately voted on the proposal of including a 100 million DAI (MakerDAO’s stablecoin) ceiling participation facility of Huntingdon Valley Bank as a vault.

This marked the first-ever collateral integration between a financial institution and a DeFi protocol. Thus, permitting such banks to borrow towards their property utilizing DeFi.

Now, it will be extremely helpful for small banks such because the Huntingdon Valley Bank, which holds about $500 million price of property whereas the Total worth locked on MakerDAO exceeds $7.3 billion.

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Furthermore, MakerDAO has been supporting the restoration of different protocols as nicely, such because the Celsius Network which just lately paid off your complete debt it owed to Maker to reclaim its $440 million collateral.

The merge of DeFi with banking may additionally function a lift for MakerDAO, which over the previous three months has been noting a gradual enhance within the lending income.

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After peaking at nearly $10.2 billion again in February this yr, the income started declining and hit a 7-month low of $5.7 billion in May.

But since then, regardless of the worsening market circumstances, income from lending property has risen and at the moment quantities to $6.2 billion.

Screenshot 2022 07 12 152734

MakerDAO lending income | Source: Dune – AMBCrypto

Not so surprisingly, many of the income generated has been within the type of stablecoins as an alternative of cryptocurrencies. Up till October 2021, the ratio of borrowed property was dominated by Ethereum with a forty five% share, whereas stablecoins solely accounted for 33.5% share.

Screenshot 2022 07 12 152626

Lending income by the asset | Source: Dune – AMBCrypto

At the time of writing, the identical ratio modified to eight.7% for ETH, and 66.8% for stablecoins, because the latter has been the one asset to not lose their worth except Terra and the momentary depegging of Tether.

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