Introduction

DAI is the stablecoin of MakerDAO, and one of the leading stablecoins on the crypto market along USDC and USDT (and UST, until a few days ago at the time of this writing).

DAI is over-collateralized, which means it gets minted when a user deposits ETH into a MakerDAO vault in an amount that exceeds the amount of DAI to be minted by an additional 50% (technical docs, and non-technical CoinDesk explanation).

Methodology

In this analysis, I calculated the following metrics for the most recent 12-month period:

• total DAI minted (sent from 0x0000000000000000000000000000000000000000 address) per week,

• total DAI burned (sent to 0x0000000000000000000000000000000000000000 address) per week,

• net weekly DAI volume change (mints minus burns),

• as well as the daily prices for MakerDAO's tokens DAI (its price being the US dollar peg) and MKR (governance token) to provide additional context.

When and why did we see large shifts in amount DAI on the market?

Here are some notable points in time, and possible explanations for these shifts.

1) 13 December 2021: By far the most DAI minted AND burned

The December spike in mints and burns is visible on the first chart.

Looking at the last chart (DAI and MKR token prices), this coincided with volatility and depegging of DAI, slight in absolute terms, but notable in relative terms. This was the lowest that DAI fell against the dollar in the past year.

A number of factors would have contributed to this perfect storm. Among them, AscendEX hacker sent stolen funds to DAI to avoid getting frozen by other stablecoin issuers. An anon mistakenly burned 10M DAI and asked for it to be recovered and re-minted, which indeed happened in January (a nail-biting twitter thread here).

2) 9 May 2022: High DAI burn during the Terra collapse

The biggest change over the past year in the amount of DAI on the market took place, not surprisingly, during the week of 9 May 2022 - the week of the epic Terra collapse. During that week, nearly 1.5B more DAI was burned than minted. DAI also depegged upwards (see last chart). This was a volatile week for the stablecoin space in general, with pegs shakier than usual (see my previous analysis here) and public/degen confidence in stablecoins low. This general market loss of confidence and funds, it is not surprising to see a net DAI outflow for that period.

Author

This analysis was created by catscatscode (Flipside, Twitter) on 18 May 2022 for Flipside Crypto's "DAI on the Market (May 13)" MakerDAO bounty.