Report: DAI theory can generate up to 3.18 times of deposits and 2.18 times of borrowings

Cryptographic Stabilization Currency Report 09: Increasing circulation of USDC and DAI; DAI as an Example

Original text: Haibo Jiang, MYKEY Researcher & NBSP;

In order to help cryptocurrency market participants keep updated on the development status of stable currency, we launched MYKEY Stability Currency Report to share our interpretation of the development status of stable currency and analysis of its development trend. We look forward to maintaining exchanges with our peers to jointly explore the development prospects of the stable currency.

Quick preview

Last week, USDC's outstanding stock increased by $72.3 million, giving it a market value of $1.11 billion.

-DAI's turnover increased by 27.91 million to a market value of $200 million.

- THE circulation of USDC and DAI has been increasing recently, and USDT has suspended the issuance.

- Theoretically, a dollar of DAI can generate up to $1.82 of DAI and $1.36 of ETH deposits, and $0.82 of DAI and $1.36 of ETH borrowings. Therefore, repeated deposits and loans between DAI and ETH can theoretically generate a maximum of 3.18 times deposits and 2.18 borrowings.

I. Overview of stability currency data

We begin by reviewing the changes in the basic information of each stabilisation currency over the past week (4 July 2020-10 July 2020, the same below).

Market flow

(Source: MYKEY, Coin Metrics)

The amount of stable currency in circulation continues to grow, and the market value of the main stable currency has reached us $12.235 billion.

(source: MYKEY, Coin  The Metrics)

In the past week, the stability currency has gained about $85.15 million in market value. USDT in several common chain are not additional; USDC's outstanding volume increased by another $72.3 million to a market value of $1.11 billion. DAI's turnover increased by 27.91 million yuan to a market value of 200 million US dollars. Increase GUSD flow by 250,000; The circulation of PAX, BUSD, TUSD and HUSD decreased by 6.6 million, 2.85 million, 4.28 million and 1.59 million respectively. The circulation of USDC and DAI has increased steadily in the recent period.

Address number of COINS held

(Credit: MYKEY, DeBank)

In the past week, the number of stable currency addresses on the Ethereum network continued to fall by 1,848, mainly due to a drop in the number of USDT addresses.

(Credit: MYKEY, DeBank)

USDT dropped by 2,772 addresses; The number of banknote addresses of USDC and PAX decreased by 677 and 340 respectively; The number of TUSD and DAI holdings rose by 9 and 1,932 respectively.

Number of active addresses

(source: MYKEY, Coin  The Metrics)

The number of active addresses per day in stabilisation currency fell by an average of 6.05% from the previous week. USDT's daily active addresses are down 7,781 from a week ago.

Number of transactions on the 24-hour chain

(source: MYKEY, Coin  The Metrics)

The number of daily transactions in the main stabilisation currency fell by an average of 1.74 per cent from the previous week.

Turnover on the chain 24 hours a day

(source: MYKEY, Coin  The Metrics)

(source: MYKEY, Coin  The Metrics)

The value of transactions on the main stability currency chain increased by 0.9% last week compared with the previous week, and DAI accounted for a larger share before the comparison.

Ii. Compound theoretical leverage multiple

Compound became the largest DeFi lending platform after it began distributing governance tokens COMP last month. Currently, total DAI deposits in the Compound are $865 million and total loans are $782 million, but the actual DAI supply in Maker is only $201 million.

In reality, Banks match different people's deposit and loan needs. It's rare for someone to have money in one bank and borrow from the same bank, but it's more common in Compound. Next, we'll explore the leverage arbitrageurs can add to maximize their capital.

In Compound terms, there is a parameter called Collateral Factor, which stands for the loan ratio that can be secured against the asset. The mortgage factor is between 0 and 1, and different assets have different mortgage factors. Take DAI and ETH for example. DAI's mortgage factor is 75% and ETH's mortgage factor is 60%. The ETH of $0.75 mortgage, can lend DAI of $0.45, and then mortgage DAI to the ETH, and so on. Using the arithmetic sum formula, we can calculate that 1DAI can produce up to $1.82 of DAI and $1.36 of ETH deposits, and $0.82 of DAI and $1.36 of ETH borrowings. Therefore, repeated deposits and loans between DAI and ETH can theoretically generate up to 3.18 times of deposits and 2.18 times of borrowings. It should be noted that this is only a theoretical value, in practice if the mortgage factor full lending may be due to price fluctuations and liquidation. Compound Interest means Compound Interest. The project's name means Compound Interest. There is no resistance to the same person borrowing money over and over again. In order to obtain the COMP certificate reward, arbitrageurs will deposit and borrow money repeatedly with a sum of money, but there is no such demand in real life.

So much for this MYKEY Stability coin report, so stay tuned. In the following reports, we will provide you with more interpretations on the development status and trends of the stable currency, and help you keep updated on the development of the stable currency.

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