As I spoke about yesterday, people love to write-off projects as dead and forget about them (or mock them) if its token is underperforming. One of the most popular projects that speculators have locked to mock is Maker simply because the MKR token has been underperforming against both USD and ETH for a long time. Well yesterday the MKR token finally decided to wake up and now everyone seems bullish on Maker again.
The funny thing about this is that the Maker platform has been growing rapidly over the last few months - setting new record highs for DAI supply and hitting debt ceilings on various collateral types seemingly every day. This growth does actually flow to the MKR token because all of the “revenue” that the Maker platform generates from stability fees goes to buying and burning MKR. Though, there are many debates surrounding this value accrual method and why it is not optimal but I won’t go into that in this piece.
The MKR token also gives holders governance rights over the platform which many in the community dismiss as not a value driver for a token. This is confusing to me - why wouldn’t it be valuable to have a direct say in how a platform is governed? For example, if holders are unhappy about the revenue they are getting on their tokens (via some sort of dividend) they could vote to increase that revenue thereby increasing the fundamental value of the token itself.
Markets are extremely reflexive in both directions - if a token price is falling for long enough then people will sour on a project and usually exit their positions. The more people that exit, the deeper the despair goes until basically you only have the die-hard supporters left. But then, when a token starts performing again, the sentiment pendulum swings back so rapidly that you’ll miss it if you blink. This is exactly what we’ve seen happen with projects like SushiSwap, Yearn and even Ethereum itself - now it’s Maker’s turn.
Anyway, I don’t know if the MKR token will keep outperforming as we progress through this bull market (and I don’t own any myself) but I do know that the sentiment has definitely shifted and the Maker platform still has plenty of growth left in it. So if you’re still betting against Maker at this point then you’re probably going to lose that bet.
Have a great day everyone,
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All information presented above is for educational purposes only and should not be taken as investment advice.