MakerDAO, the governing body of Maker Protocol, saw its revenue plummet in the third quarter of 2022, due to lower demand for loans and some liquidations, while expenses remained high.

According to an Oct. 13 tweet from Johnny_TVL, a Messari analyst and co-author of “The State of Maker Q3 2022,” the decentralized autonomous organization saw revenue dip to just over $4 million in the third quarter, in down 86% from the previous quarter.

One of the results was MakerDAO’s first quarter net income loss since 2020.

MakerDAO declaration of value as of September 30, 2022. Source: Messari

Messari’s senior research analyst said few liquidations and weak demand for loans were the reasons for the drop in revenue.

Its two biggest earners, Ether (ETH) and Wrapped Bitcoin (wBTC), performed poorly in the last quarter, with earnings from ETH-based assets falling 74% and earnings from BTC-based assets down 66%. %.

Borrowers use these cryptocurrencies as collateral for loans from the stablecoin Dai (DAI), providing some security against the volatility often seen in cryptocurrency markets at the cost of interest paid on the loans.

Manufacturer quarterly revenue per warranty token. Source: Messari

The analyst also pointed to a decline in MakerDAO’s collateral ratio, suggesting the ratio fell to 1.1 from 1.9 in the same period last year.

However, “spending is not that elastic,” the analyst said, with the report showing spending remained high in the quarter at $13.5 million, down just 16% from the prior quarter. .

Related: Nexo-labeled address withdraws $153 million in wrapped BTC from MakerDAO

Meanwhile, MakerDAO recently took steps to increase the yield on the assets it holds as collateral, after launching a $500 million investment proposal in treasury bills and bonds. MakerDAO believes this will provide the protocol with additional low-risk returns.

Another bright spot for MakerDAO has been the growth of real asset-backed (RWA) loans, which now represent 12% of its total revenue after successfully rolling out its largest RWA-backed loan to Huntingdon Valley Bank (HVB) in third quarter of 2022.

The loan, which involved creating a vault with 100 million Dai, is a new type of collateral in the Maker Protocol that can help it generate additional revenue through the vault stability fee associated with maintenance of the safe and typing of the DAI.

HVB is still in a position to benefit from this integration as it allows the bank to effectively increase its legal lending limit, and MakerDAO hopes that if all goes well other banks will follow behind HVB.