In the past week, MakerDAO has experienced a drop in total value locked (TVL), the supply of DAI, and annualized fee income, signaling some potential trouble for one of the world’s largest stablecoin issuers.

Additionally, MKR’s value decreased by 25% during the same timeframe. Despite DAI’s recent return to parity with the US dollar, there is growing uncertainty about whether it will remain pegged, causing a decline in MakerDAO’s TVL over the last seven days.

On-chain data suggests that MakerDAO’s decrease in asset value can be traced back to a reduction in collateralized loans on the platform. This drop in loans appears to be driven by concerns about the sustainability of the DAI stablecoin, which in the past week has seen a 13% decline in supply, per Marker Burn data.

As a result, the supply of DAI also decreased, with Maker Burn data showing a 13% drop since March 13. Currently, the supply of DAI stablecoin is at 5.6 billion tokens. When the supply of DAI declines, it indicates a decrease in circulation, possibly due to a reduction in demand as observed in the past week, or due to a flight into other crypto assets, such as Bitcoin and Ethereum, both have which have surged in the past week.