DEFI Savings Protocol Sky displayed a loss of $ 5 million in the first quarter after payments of interest to tokens holders have more than doubled, according to a report created by the contributors of Sky de Steakhouse Financial.
Loss is a striking turnover of the previous quarter, when Sky, formerly known as Makerdao, recorded a profit of $ 31 million. The reason for the 102% increase in interest payments is the decision to encourage the use of the new Stablecoin dollar (USD) of the existing DAI.
“The sky savings rate was kept very high at 12.5% compared to the rest of the market, leading massive entries” Rune Christensen, co-founder of Sky, told Coindesk above Telegram. When Sky began to reduce interest rates to 4.5% in February, many investors have remained, he said.
The situation is a double -edged sword for the protocol, which was among the first cohort of decentralized financial applications to mount on Ethereum in 2017.
Sky operates similar to a traditional bank. He must lend others to a rate higher than what he pays his savers.
However, offering higher rates on the USD without a corresponding increase in the demand for a stablecoin to the profitability of the protocol, the Blockchain research and development company, GFX Labs told Coindesk Over Telegram.
“The USDS is a significant trail on income,” he said. “Dai earns money. Usds, not so much.”
The push to the USD is part of the so-called end-of-part of Sky, an initiative led by Christensen aimed at transforming the protocol into a more decentralized and resilient system.
No new request?
When Sky renamed Makerdao and launched USDS in August as part of the end of the game, the plan was that the new stablecoin would call on a different set of DAI users.
The USDS has been designed to better comply with the regulations and requirements of financial information. He targeted sophisticated investors such as hedge funds, families and other institutions seeking to plunge their toes into decentralized finances.
But it is not clear if USDS has attracted a large number of new users.
The yields that investors can win on USDS completed by DAI are different: the USDS pays 4.5%, while DAI reports 2.75%.
Many investors have exchanged their DAI for the USD, which means that Sky had paid more people who were previously happy to earn a lower return or, in many cases, no yield, said Paperimperium.
Admittedly, the report indicates that the combined offer of USDS and DAI has increased by 57% since the start of the quarter. But a large part of this increase comes from Ethena, the synthetic dollar protocol. He stacked more than $ 450 million in the marked USDs and transmits the yield to those who put his own stable, USDE.
During last week, Ethena changed some of its USDS reserves to USDTB – a stablecoin supported by the BlackRock Institutional Liquidity Fund, or Buidl.
This decision means that there is fewer USD in traffic. But this can also benefit heaven by reducing the amount of interest that the protocol must pay.
Read more: Christensen de Makerdao hopes the “firm decision” while MKR holders vote on the Sky brand
