MakerDAO is the largest DeFi protocol by value locked (or TVL), with over $2.5 billion in collateral. Maker is also perhaps the oldest DeFi project, pioneering on-chain governance and financial dApps. The supply of DAI, Maker’s native stablecoin, crossed the coveted $1 billion threshold recently, and Maker’s collateral base grew at an astounding 15% per month between Jan 2018 and Dec 2020.

Yet Maker’s native governance token, MKR, underperformed the so-called blue chips by a wide margin during this year’s DeFi run up. Let’s dive into a few reasons why that might have happened.

Source: TradingView

Competing Against Secondary Markets

First, a short introduction to Maker’s design.

Users can deposit any of several accepted tokens in a Maker vault and borrow the DAI stablecoin against the value of those tokens. The protocol charges bo

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