In the last seven days, MakerDAO has recorded a decline in its annualized fee income, total value locked (TVL), and the supply of its stablecoin DAI, suggesting possible troubles for one of the biggest stablecoin issuers. Moreover, CoinGecko data shows the firm’s native token MKR posted a 25% drop in that period to trade at $664.3 as of this writing.

Crypto analysts claim that the drop in MakerDAO’s TVL is likely stemming from the increasing uncertainty in regard to whether DAI will retain its peg after losing it on March 13 following the downfall of the Silicon Valley Bank.

Maker Burn data also shows a decrease in collateralized loans on the MakerDAO’s protocol due to negative investor sentiment about DAI.

Additionally, the data indicates that DAI’s circulating supply has been dropping since March 14. At press time, there are about 5.7 billion DAI tokens in supply. The decline signals DAI is not in high demand or that its investors are converting the stablecoin to crypto assets like Bitcoin and Ethereum, which have been posting massive gains over the past few days.

What Decline in DAI’s Supply Means for MakerDAO Annualized Fee Income

The annualized fee income for MakerDAO has reduced in the past seven days, thanks to DAI’s declining supply. MakerDAO usually earns income by collecting fees from users opening collateralized Debt positions. The fees are only paid in DAI and then converted to MKR.

Therefore, a drop in the DAI supply can cause a decrease in fees, subsequently leading to a reduction in MKR tokens generated as fee income. As per Maker Burn data, the annualized fee income has plunged 11% since Silicon Valley Bank crashed.

USDT Benefits from DAI and Other Stablecoins Troubles

Data from CoinGecko shows the largest stablecoin by market cap, USDT, reached a market valuation of $75 billion last week for the first since last May. In February, USDT surged by roughly $5 billion after BUSD issuer Paxos encountered a regulatory attack from the Securities and Exchange Commission.

At the time, the BUSD market cap appeared to decrease while that of USDT increased, suggesting that investors of the Binance-branded stablecoin were converting their bags to Tether’s USDT.

Today, USDT has extended its market dominance to 56% at the expense of DAI, USDC, and BUSD troubles.