The Maker Foundation completed another capital raise today from two prominent venture capital funds through the sale of MKR tokens.
With this deal, venture capital firms Dragonfly Capital Partners and Paradigm acquired around ~5.5% of the total MKR supply for $27.5 million. The joint investment is set to support Maker’s efforts to increase Dai adoption in Asia given Dragonfly’s and Paradigm’s deep expertise in the Asian markets.
To give some better estimations on the raise, ~5.5% of total MKR sold (55,000 MKR) for $27.5 million results in an average price of $500 per MKR, slightly above the current market price of $475.
In comparison, in September 2018, the foundation sold around ~6% of the total supply of MKR for $15 million to Andreesen Horowitz (averaging ~$250/MKR). The year prior, in December 2017, Maker announced it had sold $12 million of MKR to a handful of private investors in the midst of the ICO bubble. The average price on this raise is relatively unknown.
It goes without saying that the Maker Foundation has been extremely well-capitalized over the past three years. With that said, the Foundation has done a tremendous job at proliferating the use of a permissionless and global stablecoin within the DeFi ecosystem. However, Dai has struggled to garner any significant traction in the Eastern markets. Therefore, this capital comes in at a vital time as MakerDAO looks to begin its efforts to bring DeFi into the Asian markets.
For the most part, Asia’s stablecoin market is largely dominated by Tether (UDST) despite the criticisms and legal trouble that persist in the West.
With that, there’s already an established market for USD-denominated stablecoins in Asia. The Maker Foundation is looking to capitalize on this existing market and drive some interest in their permissionless stablecoin from that side of the globe.
The raise comes after a very recent integration from OKEx, one of Asia’s largest centralized exchanges, with the Dai Savings Rate (DSR). Beginning on December 23rd, OKEx users will be able to lock their Dai into the DSR directly through their OKEx account. The DSR currently boasts an annualized return of ~4%.
MakerDAO is clearly looking to make big moves to bring Dai into the Asian market in 2020. With the recent integration into one of the largest exchanges in tandem with the new influx of capital, the Maker Foundation has a growing set of resources to support this expansion.
The past year for Maker has been nothing short of exciting. In November, we saw a major milestone with the launch of Multi-Collateral Dai and the Dai Savings Rate. Moreover, the DeFi market as a whole has seen explosive growth, especially in the lending and stablecoin sector. Since 2018, Dai’s market cap has grown by over 3,194% compared to USDC’s 1771.29% and Tether’s mere 215.38%.
It is becoming clear that the global, permissionless stable coin is outpacing its centralized counterparts and is beginning to establish itself as the leader within the stablecoin space.
Looking forward, it will be interesting to see how the Maker Foundation deploys its new capital to successfully expand into the Asian market, a market that western companies have historically struggled to penetrate, over the next 1-2 years.
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Analyst at Bankless – one of the leading resources for open finance. Lucas is an active contributor to the DeFi ecosystem with appearances in other notable DeFi outlets including The Defiant and Our Network. He has years of experience working with dozens blockchain and token startups where he focused on token economics, marketing, and growth.