What Will Be the Impact if the Supply of DAI Drops to 4 Million
Journalist
- DAI supply is at a record low.
- MKR is still at risk of possible price declines despite the recent increase.
MakerDAO has a total supply of MakerDAOs [MKR] According to MakerBurn.
At the time of publication, the supply of DAI was 4.42 million DAI. This is the lowest level since August 2023.
The increase in Total Value Locked (TVL) within the Decentralized Finance (DeFi) ecosystem has been in double digits since the beginning of March.
According to DefiLlamas TVL for the DeFi sector has increased from $87 billion to $99 billion in the last eight days.
The Collateralized Debt Position Model (CDP), designed to maintain the value of the stablecoin relative to the US dollar, is often responsible for the decline in DAI supply.
The interest rate for borrowing DAI from MakerDAO increases as the value of the assets backing DAI decreases.
The high interest rates discourage new borrowers and encourage existing borrowers to pay off their debts as quickly as possible to avoid paying higher interest rates.
Due to all these factors, the supply of DAI will decrease.
The increase in the value of crypto assets that support DAI, such as Ethereum, has been observed in recent weeks. [ETH]Wrapped Bitcoin [WBTC]Basic Attention Token [BAT]Compound [COMP].
The recent decline in DAI supply could be due to the general decline in interest in stablecoins on MakerDao.
MKR is excellent, but…
The value of MKR has increased even though the supply of DAI is decreasing.
According to data from CoinMarketCap.
A one-day chart of the token price showed that there was a possibility of a temporary decline.
MKR is climbing to a new two-year high, but its Awesome Oscillator Indicator (AO) has shown red bars up for much of the past week. This indicator measures the dynamics of the market.
TradingView
What is the current value of 1,10,100 MKR?
It is a bearish sign when red bars point upwards.
A divergence between an asset’s price and its momentum, as measured by its AO, may indicate that the trend may not be stable and a reversal may be imminent.
