MakerDAO, the organization behind the popular stablecoin Dai (DAI), has implemented temporary fee adjustments to its protocol in response to recent market fluctuations.
The latest Executive Vote has just been approved.
As a result, the following changes will be implemented within the Maker Protocol on March 10, 2024, at 19:55 UTC.
• Stability Fees for various collateral assets, including ETH and WBTC vaults, will… pic.twitter.com/UNUejjv8iI
— Maker (@MakerDAO) March 8, 2024
These changes aim to maintain the stability of Dai’s peg to the US dollar despite a decrease in its supply and heightened market activity.
A proposal submitted by BA Labs, a member of MakerDAO’s advisory council, highlighted a rapid decline in Dai’s supply from $5 billion to $4.4 billion within a week.
While Dai is backed by collateral exceeding its value, the proposal emphasizes potential liquidity concerns if users choose to redeem a portion of the $1.1 billion in real-world assets (RWA) currently held by the protocol.
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“The issue lies in the liquidity crunch inherent in the exposure toward stablecoins deployed through RWAs,” the proposal reads.
The implemented measures focus on Maker Vaults, the system users interact with to generate Dai, and various interest rates within the MakerDAO ecosystem.
Some of the adjustments include an increase in stability fees, which are charged on borrowing Dai through collateral, from 15% to 17.25%.
The Dai Savings Rate will also be raised to 15%, which aims to incentivize holding Dai.
Furthermore, the annual percentage yield (APY) for borrowing Dai through the SparkLend platform will jump from 6.7% to 16%.
These changes, effective March 10, 7:55 PM UTC, are intended to be temporary.
However, the process for reverting the fees back to their original levels is not automated.
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