- Maker price climbed 16% over the past week and 1% on the day.
- The altcoin continues to outperform most cryptos as it works towards doubling revenue through an increase in DAI supply.
- MKR price gains are likely sustainable as supply held by top addresses continues to grow while total supply on exchanges is largely unchanged.
Maker price has increased 16% over the past week, emerging as one of the best performing altcoins in the ecosystem. The Ethereum-based DeFi token is used in the generation of the stablecoin DAI.
The supply of the token held by top addresses is gradually increasing since September 6, suggesting that MKR's recent price gains are likely to be sustained.
MKR holders expect doubling of revenue soon
Maker’s lending platform allows users to lock their Ethereum tokens into smart contracts and mint the stablecoin DAI. As DAI supply increases, it increases the revenue for Maker, acting as a bullish catalyst for the token.
MKR price climbed 16.83% over the past week on Binance. In the same time frame, supply of the stablecoin DAI increased 23%, or by $1 billion. A large part of Maker’s revenue is spent on growing the supply of the stablecoin. The current supply of DAI puts Maker’s annualized revenue at $181 million. Once DAI supply doubles, it will likely also double Maker’s revenue as the two are highly correlated.
Analysts will closely monitor MKR revenue and the token’s gains over the next few months to identify further catalysts.
On-chain metrics also support MKR price gains
Between September 6 and 20, MKR token’s supply on exchanges remained largely unchanged. Over the same time period, MKR held by top addresses as a percentage of the total supply increased from 45.11% to 45.65%. A gradual increase in the supply held by large wallet addresses, accompanied with no increase in the total supply on exchanges, implies that whales are choosing to hold their MKR tokens instead of dumping them on centralized exchanges.
MKR supply held by top addresses vs supply on exchanges vs price
This metric supports the thesis of a MKR price rally as long as supply on exchanges is relatively stable. An uptick in the token’s total supply on exchanges could signal an increase in selling pressure on MKR and a subsequent decline in price. MKR price is $1,302 on Binance at the time of writing.
Bitcoin, altcoins, stablecoins FAQs
What is Bitcoin?
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
What are altcoins?
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
What are stablecoins?
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
What is Bitcoin Dominance?
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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