Ethereum’s decentralized finance (DeFi) sector has undergone parabolic growth over the past few months. The value of coins locked in DeFi protocols has surged to a cumulative $4.25 billion for the first time ever. Simultaneously, the value of DeFi coins has gone parabolic. Many DeFi projects like Chainlink and Synthetix Network Token are up by hundreds of percent against BTC and the dollar since the start of 2020. The growth of Ethereum’s space has not aided MakerDAO, though. The coin of the protocol is down 55% against ETH this year, according to one analyst. Ethereum’s MakerDAO is Down 55% Against ETH in 2020 Despite DeFi Boom

Ethereum’s MakerDAO has long been the flagship protocol of the entire DeFi industry. Offering the famous DAI stablecoin and a platform for one to obtain decentralized loans, the protocol now locks in excess of $1 billion worth of cryptocurrency.

That makes it the most important protocol to DeFi by far, especially since it offers the stablecoin that underlies many applications, DAI.

Despite MakerDAO’s importance and growth, its native token Maker (MKR) has not performed well against Ethereum in the past year. Cryptocurrency researcher Hasu commented on the asset’s performance:

“whoa, MKR is down 55% vs ETH this year, even as ETH has been outperformed by many DeFi tokens. seems like a rising tide does not float all boats. at the same time, the supply of Dai has increased from ~70m to ~360m. does someone keep track of MKR revenue via burn?”

MKR’s underperformance is seemingly a byproduct of a collapse in earnings they are entitled to, Hasu speculated:

“I found annualized MKR earnings. they did indeed fall of a cliff in the last year, crazy if you consider how much smaller Dai supply was mid-2019. the explanation is probably that Dai has traded consistently above $1 this year and so stability fees are zero… this also means IF Maker ever successfully implements negative rates, revenue to MKR holders is probably going to surge to entirely new levels, now that supply is 4x higher than mid-2019.”

As of this article’s writing, Maker trades for $603 or 1.54 Ethereum. The cryptocurrency has a market capitalization of around $600 million as well.

Some say that MKR is undervalued because it is literally the backbone of DeFi. A cryptocurrency analyst team found earlier this year, though, that the Ethereum-based asset may be overvalued.

The team from the firm AlfaBlok found that MKR’s then valuation of $350 million “implies very aggressive growth rates, of over 70%+ Dai circulation increase per year reaching Trilions of Dai in circulation, in order for current valuation to make sense.”

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