Fusds and
GM! Welcome to Milk Road PRO. The newsletter that’s there when your portfolio needs a hug.
(“Shh, shh, shh, don’t worry, everything is going to be ok”).
Maker, the DeFi OG, is down. Badly.
We love Maker. So does our community. And $MKR is a part of our Milk Road PRO Portfolio.
So…what the hell is going on here?
While Ethereum is down just 26% and the broader DeFi market 47%, Maker ($MKR) has taken a beating, dropping a staggering 65% since its March highs.
Looking at this chart, it’s hard not to start questioning our investment in Maker.
Is now the time to sell and cut our losses or double down and buy more $MKR at a bargain price?
That’s exactly what we’re going to answer today.
Here’s the rundown of how this report will unfold:
- We’ll start with a look back at Maker’s history to understand the vision behind its endgame plan.
- We’ll dive into what makes Maker unique and reveal its "north star" metric
- Then, we’ll break down the main critiques currently being leveled at Maker.
- We’ll explore some potential positive catalysts that could drive growth.
- We’ll discuss the upcoming challenges Maker needs to tackle.
- And finally, we’ll wrap it all up with our thoughts on the current situation.
So whether you're a current Maker investor questioning its future or someone eyeing these low prices as a buying opportunity, this report has something for you.
And hey, before you dive in, just a heads-up—there’s a lot of information here.
So grab a comfy chair, make yourself a coffee, and settle in. We packed this report with all the “behind-the-scenes” details and insights you might not find anywhere else.
You know the saying, “less is more”? Well, not this time.
We promise you won’t be bored for a second, and you know what?
By the end, you might even feel a little sad it’s over. Enjoy!
HISTORY OF MAKER
Let’s start by talking about the challenges Maker has faced in the past and what led them to create the Endgame Plan.
Maker went through what few startups are lucky enough to experience—explosive growth. (From $300 million in TVL in 2020 to a massive $10 billion in 2021.) 🤯
But unfortunately, there are very few companies that can handle that kind of rapid expansion, without things spiraling out of control – and Maker is no exception.
Maker struggled with the classic problems:
Overhiring, chaotic processes, and a level of complexity where people lost track of what was really happening.
It became a tangled mess where no one knew what others were doing, making it hard to keep everything on track.
All of this, combined with the goal of becoming more censorship-resistant and reducing regulatory risks, led to the creation of the Endgame Plan.
NEW ERA OF MAKER
The Endgame plan was a way for Maker to regain control, streamline operations, and protect itself in an increasingly complex landscape.
You might think the Endgame Plan would have been easily embraced by the majority, but that was far from reality.
There were intense debates among major stakeholders about whether this was the best path for Maker’s future – though despite the pushback, the proposal passed in August 2022, and the team got to work.
But even then – Maker still had a whole lot more going on behind the scenes.
MAKER EXPANDS ITS REVENUE STREAMS
Maker became the first crypto player to tap into U.S. treasuries, which were offering higher yields than traditional DeFi rails.
By September 2023, Maker had over $3.2 billion deployed in U.S. treasuries, generating a yield of around 4-5%—equivalent to roughly $150 million annually.
Check out Maker's composition below:
A year ago, Real-World Assets (see the green area on the chart), primarily U.S. treasuries, made up about 65% of Maker's total assets.
This sparked criticism from some in the community, who argued that Maker had become too centralized and overly dependent on U.S. treasuries.
While this criticism was valid, such an allocation allowed Maker to generate massive revenue—far beyond what anyone else in the space was making.
❌From the perspective of a blockchain maximalist, centralization is a bad thing.
✅ But from an investor’s standpoint, it was the best move at the time.
Obviously, it’s hard to fully quantify the risks involved, but we believe Maker wouldn’t tap into something without having high confidence that major risks were mitigated through off-chain agreements and top-tier security measures.
Especially when you're managing a few billion dollars, like Maker, you take every precaution to protect those assets.
Alright, let’s say you accept that Maker is making the right move for now….
Naturally, a new question still arises:
If 65% of Maker's assets are deployed into treasuries, what happens when yields drop back to the 1-2% range?
This has become even more apparent now that central banks have started lowering interest rates, with more cuts likely on the way. 🙄
How will Maker adapt to that challenge?
Enter Spark, a spinoff from Maker designed to be a lending platform similar to Aave.
Why Spark?
Because on Maker, you can only create a single vault, deposit $ETH or $BTC, and borrow against it—but here’s the catch:
You can’t combine the value of $ETH and $BTC to increase your borrowing limit. That’s where Spark changes the game, allowing users to combine assets for greater borrowing power!🔥
Spark lets users earn yield on their favorite crypto (which is a huge draw) allowing them to simply go to Spark, lend their assets, and earn some yield in return.
Ok, but why is this great for Maker? 🤔
Because Maker acts as a minting facility for Spark.
The more total value locked (TVL) Spark has, the more $DAI or $USDS it can mint through Maker and offer to users at cheaper borrowing rates.
The best part? The more $DAI in circulation, the more revenue for Maker. Win-win.
Just look at how much $DAI has been minted through Spark.
Spark launched last summer and is now responsible for 1.58 billion $DAI in circulation. And generates around $70 million in revenue for Maker—pretty freakin’ impressive.
But that ain’t the half of it!
With $1.31 billion in excess stablecoin liquidity, Maker developed a vault called LitePSM, which lends stablecoins to Coinbase Prime—the institutional arm of Coinbase—earning a solid 4.25% APY.
(Another savvy move to boost revenue!).
Feeling a little lost with all the revenue streams Maker has built over time? We’re with you!
So let’s break it all down…
We'll stick to their official terms so that, if you're checking their dashboards yourself, you'll recognize the terminology.
- Core – Borrowing on Maker by using single assets like $ETH and $BTC as collateral. (currently around 6% APY, expected to increase)
- RWA - US treasuries (currently around 5% APY, expected to decrease)
- Stablecoins - litePSM module (currently around 4.25% APY, expected to decrease)
- Spark - Lending markets (currently around 6.5% APY, expected to increase)
And before you ask, here’s the breakdown of how much each revenue stream contributes to Maker’s total revenue:
Very well distributed across all revenue streams. 🤝
...which brings us to Maker's competitive advantage.
MAKER'S INNOVATIVE OFFERING
No other stablecoin issuer comes close to Maker as far as total number of revenue streams goes.
Even the giants like $USDC and $USDT—despite having a whopping 150 billion stablecoins in circulation—rely solely on U.S. Treasuries.
And perhaps even more importantly: they don’t pass any of that yield to their holders!
But Maker? They’ve taken things to the next level.
Not only do they have multiple revenue lines, but they actually share a chunk of that income with their stablecoin holders. If you’re holding $sDAI or $sUSDS, you’re automatically earning 5.5% or 6.5% without doing a thing.
No extra steps—just passive yield straight to your wallet. 🤗
That’s a pretty compelling value proposition.
But how do we actually measure the demand?
Uh, Oh… 😧 The rest of this report is exclusive to Milk Road PRO members!
WHAT’S LEFT INSIDE? 👀
- The single most important metric we track for Maker
- The two big challenges Maker still has to face in the coming months
- Maker's not-so-obvious market edge (no one is better positioned to offer this than $MKR)
- The four major catalysts that could significantly boost Maker’s growth in 2024 and 2025
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