How much does MakerDAO spend on network operation and maintenance in a year?

TVL is lagging behind Lido despite high annual costs to keep it running.

Written by: Bitcoinist

Compilation: Blockchain Knight

MakerDAO is a decentralized currency marketplace on Ethereum where users can borrow and lend assets including ETH. According to data from DeFiLlama on May 31, MakerDAO spends $27.66 million per year to maintain the operation of the agreement.

The funds are used to pay for the 97 people responsible for maintaining the lending protocol and making sure the code works, among other expenses.

As of May 31, MakerDAO has spent over 10.6 million DAI in 2023 alone.

DAI is an algorithmic stablecoin pegged to the US dollar minted and managed by MakerDAO.

It differs from other popular fiat-backed stablecoins such as USDT or BUSD. The latter are minted by a centralized entity and require each token in circulation to be backed by an equal amount of fiat currency (mainly U.S. dollars).

MakerDAO has spent 10.6 million DAI so far.

15% of the total spend is for sustainable ecosystem expansion, while the rest is allocated to protocol engineering, strategic finance, oracles, development and improving the user interface, etc.

Employees receive compensation and other benefits from funds allocated to the protocol engineering department, which currently has a monthly budget of 620,000 DAI and is expected to drop to 480,000 DAI.

Specifically, MakerDAO approved about 400,000 DAI per month for employee compensation and benefits, and only 2,072 DAI was spent on travel and other entertainment.

However, in addition to the expenditure of employee salaries and fringe benefits, DAO also approved 70,000 DAI as a fee for professional services.

The protocol engineering department does not work with external auditors, so in order to make spending transparent, they must submit a monthly expense report for evaluation and approval by the MakerDAO community.

In “Development and User Interface,” software spending increased significantly by more than expected amounts. Last month, MakerDAO spent 8635.78 DAI to keep Amazon Web Services servers running, 2976.68 DAI over budget.

The capital required to keep MakerDAO running is approximately $10 million more than the capital required to maintain Aave and Lido. According to the data, Aave and Lido require annual operating expenses of US$19.2 million and US$16.81 million.

This may be a difference in headcount, as MakerDAO has 97 employees, while Lido has only 83, and Aave’s employee numbers are kept secret.

Lido is a liquid staking protocol and the DeFi protocol with the highest TVL. As of May 31, Aave’s TVL was $5.33 billion,** while LidoDAO’s TVL was $13.13 billion, twice that of MakerDAO and almost three times that of Aave**.