Evaluating MKR’s prospects as Spark protocol hits the DAI debt ceiling



  • MKR holders react because the Spark protocol reaches its newest DAI debt restrict.
  • Assessing the correlation between the debt ceiling and MKR’s worth motion.

MakerDAO has been minting extra of its DAI stablecoin lately as a consequence of incentivized demand from the Spark protocol. We lately regarded into how this demand works however the newest announcement calls into query whether or not the demand can proceed.


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What occurs when the quantity that may be borrowed reaches its restrict? In accordance with MakerDAO’s newest announcement, Spark protocol simply reached its 200 million DAI debt ceiling. As well as, this occurred inside simply eight days after raising the debt ceiling from 20 million DAI.

The event raises questions as to the way it may impression the ecosystem. Extra importantly, whether or not it would have a damaging impression on DAI demand, and subsequently the demand for MKR. Alternatively, this isn’t the primary time that the Spark protocol reached its DAI debt ceiling.

There may be all the time room for a better debt ceiling relying on demand. Sadly, that demand has to this point been fueled by the incentives to earn a return on holding DAI. Saturation will happen sooner or later, resulting in decrease returns and finally decrease DAI demand.

To this point the MakerDAO ecosystem has been displaying indicators of a slowdown. The community’s each day energetic addresses peaked at 894 addresses on 21 July and has been declining since then. For perspective, it had 195 each day energetic addresses on 14 August which is the bottom each day energetic addresses determine within the final 4 weeks.

MakerDAO daily active addresses and network growth

Supply: Santiment

MakerDAO’s community progress additionally peaked at across the similar time because the each day energetic addresses. It has been on a downward trajectory since then and is now at its lowest level within the final 4 weeks.

MKR demand slows down kicking off a retracement

MKR bulls notably ran out of momentum within the final two weeks after beforehand sustaining a bullish trajectory since mid-June.  This remark displays the slowdown in community progress as beforehand talked about.

Moreover, MKR exchanged arms at $1140 at press time after the bears took over. Thus, pushing the worth down by as a lot as 7.2% within the final 24 hours at press time.

MKR price action

Supply: TradingView


What number of are 1,10,100 MKRs worth today


The timing of the pullback within the final 24 hours aligns with the announcement concerning the new DAI debt ceiling. MKR’s Cash Circulate Index (MFI) had already demonstrated outflows for the reason that begin of the month however the promoting stress intensified within the final two days.





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