Vitalik Buterin exits MakerDAO amid Solana integration plans

Fireside chat with Vitalik Buterin | Pragma Waterloo

Vitalik Buterin, one of the co-founders of Ethereum (ETH), recently divested his remaining holdings of MakerDAO tokens, as confirmed by on-chain data from Etherscan, which Lookonchain shared.

The divestment involved the 500 MKR tokens sale that Buterin held for the past two years. Using the CoW Protocol, Buterin sold his MakerDAO tokens, resulting in 353 ETH in earnings. It was equivalent to approximately $580,000.

Buterin’s action followed a blog post published by Rune Christensen, the co-founder and CEO of MakerDAO, on September 1. Christensen’s blog entry outlined ambitious intentions to launch a new version of the project on a different blockchain, provisionally referred to as NewChain.

Buterin made his initial investment in MakerDAO in April 2018. He acquired 1071 MKR tokens for $905 per token. His recent sale reflects a profit of roughly 27 percent.

Buterin’s most recent involvement with his MKR tokens occurred in April 2021. He donated 100 tokens to support India’s Covid relief efforts.

MakerDAO’s new blockchain

According to a MakerDAO spokesperson, the upcoming blockchain project might involve a potential Solana (SOL) fork.

In the blog post, Christensen discussed his decision to consider Solana as an option, pointing out three main factors.

The factors included the high technical caliber and improvements in the Solana codebase, its resilience in facing challenges like the FTX incident and the successes of previous projects like the Pyth Network, which operates using a modified version of Solana as its underlying infrastructure.

Christensen envisions a future in which NewChain acts as a secure bridge connecting Ethereum and Solana. Nevertheless, he remained open to other possibilities, such as Aptos, Sui and Cosmos.

According to Christensen, the primary advantages of Cosmos include its extensive and skilled talent pool. It also has a diverse community of independent developers.

Decline in revenue

A thorough examination of the 2022 Financial Results for MakerDAO revealed a substantial drop in the company’s earnings. It was the year when the DeFi protocol shifted its focus from crypto-native lending to the real-world asset market.

While MakerDAO concluded 2022 with a positive balance, it faced challenges from the crypto lending ecosystem that had a detrimental impact on the protocol.

“Despite these challenges, the protocol pioneered groundbreaking new exposures to real-world assets (RWA), setting the stage for further diversification of Dai collateral types. We believe this activity is essential to ongoing efforts to diversify the collateral backing and sustainability of Dai,” said MakerDao in a statement.

In 2021, the protocol generated a total revenue of 112 million DAI. In 2022, this figure dropped significantly to approximately 65 million DAI, signifying a 42 percent decrease.

These statistics resulted in an 80 percent decline in net protocol operating earnings, falling from 90 million DAI in 2021 to 19 million DAI in 2022. Another significant factor contributing to the decrease in net operating earnings was a rise in operating expenses, surging from 21 million DAI in 2021 to 46 million DAI in 2022.

Opposing the 9 billion DAI in total DAI balances reported in 2021, MakerDAO experienced a reduced value of 5 billion DAI. It represented a 43 percent decline compared to the previous year.

The DeFi protocol linked this decrease to a series of challenging market conditions. It encompassed factors such as broader economic climate, central bank interest rate hikes and deleveraging in the crypto sector that resulted from imprudent behavior, “misconduct and inappropriate risk management” practices by prominent investors and centralized financial intermediaries.