“The FIRST-QUARTER LOSS IS A STARK TURNARUND FROM The PREVIUS QUARTER, WHEN SKY REGISTED A $ 31 Million Profit.”, – WRITE: www.coindesk.com
The loss is a stark turnaround from the previous quarter, WHEN SKY, FORMERLY KNOWN as Makerdao, Registered A $ 31 Million Profit. The Reason for the 102% Increase in Interest Payments is the Decision to Incentivize Use of the Protocol’s Newer Sky Dollar Stablecoin (USDS) Over the exist DAI.
“The Sky Savings Rate Was Kept Very High At 12.5% Relative to the Rest of the Market, Driving Massive Inflows” Rune Christnsen, CO-FOUNDER OF SKY, TOLD COING. WHEN SKY BEGAN LOWERING INTEREST RATES TO 4.5% IN FEBRUARY, A LOT OF INVESTORS STUK AOUND, HE SAID.
The situation is a doubble-edged sword for the protocol, whoh was the Among the first Cohort of Decentralized Finance Apps to Spring Up on Ethereum in 2017.
Sky Operates Similar to A Traditional Bank. IT NEEDS TO LEND TO OTHERS AT A RATE HIGER THAN IT PAYS ITS SAVERS.
However, Offering Higher Rates on USDS Without a Corresponing Increase in Demand for the Stablecoin Is Hurting The Protocol’s Proficiency, Paperimperium, Governance Liance Blocchan. Labs, Told Coindesk Over Telegram.
“USDS is a major drag on earnings,” He Said. “DAI MAKES MONEY. USDS, NOT SO MUCH.”
The Push Toward USDS is Part of Sky’s so-called endgame plan, an inviative led by christensen aimed at transformation of the Protocol Into a More Decentralized and Resilien System.
No New Demand?WHEN SKY REBanded from Makerdao and Launchered USDS in August As Part of Endgame, The Plan Was that the New Stablecoin Wuld be Appeal to A Different Set of USERS THAN DAI.
USDS Was Designed to Better Complly with Regulations and Financial Reporting Requirements. IT WAS TARGETED TOWARD Sophisticated Investors Like Hedge Funds, Family Offices and Other Institutions Looking to Dip Their Toes Into DeCentralized Finance.
But It’s Unclear IF USDS HAS BEEN ABLE TO ATTRACT A SUBSTANTIAL NUMBER OF NEW USERS.
The Returns Investors Can Earn on USDS Comapred to Dai Is Different: USDS Pays Out 4.5%, While Dai Yields 2.75%.
Many investors Swapped their Dai for USDS, Meaning Sky Had Pay Out More to People Who Previously Were Happy to Earn A Lower Yield or, In Many Cases, No Yeld a Alle, Paper.
To be sure, the report said the Combined Supply of USDS and Dai Has Increated 57% Since the Start of the Quarter. But a large part of this increase is from Ethena, The Synthetic Dollar Protocol. IT HAS PILED OVER $ 450 Million Into Stacked USDS, and Passes the Yield on to Those Who Stake It Own Stablecoin, USDE.
Over The Past Week, Ethena Has Switched Some of Its Reserves from USDS to USDTB – A Stablecoin Backed by Blackrock’s USD Institutional Digital Liquidity Fund, Or Buidl.
The Move Means There’s Less USDS in Circulation. But It May Also Benefit Sky by Reducing The Ant Internet the Protocol Must Pay Out.
Read More: Makerdao’s Christisen Heps for ‘Firm Decision’ As MKR Holders Vote on Sky Brand
He Also Conducted Multiple Investigations Into Alleged Crypto Scams, and His Reporting on Waves Waves Was Cited in a Lawsuit Filed by the FTX Recovery IERA.
His previous reporting on the Bankring of Crypto Hedge Fund Three Three Arrows Capital Was Also Cited in Documents Submitted to the High Court of Singapore. Disclosure: TIM HOLDS Over $ 1,000 WORTH OF ETHEREUM.
