MakerDAO implements temporary fee hikes to prepare for 'potential Dai demand shock'
MakerDAO, in an accelerated governance proposal, has implemented temporary fee changes to the Maker Protocol in order to shore up support for the Dai stablecoin amid market volatility. The Dai saving rate has been increased from 5% to 15%, among other changes, as Maker attempts to alleviate sell pressure of the dollar-pegged stablecoin.
The proposal was prompted by a sudden drop in dai supply from $5 billion to $4.4 billion over the past week, according to the proposal, which was submitted by BA Labs, a member of Maker MKR +16.05% 's Stability Advisory Council. While dai remains over-collateralized, since some of that collateral is placed in real-world asset (RWA) vehicles, a potential liquidity crunch could result if more dai selling continues.
"Liquid stablecoin reserves and reserves deployed to RWAs are more than sufficient to sustain the increasing pressure generated by the potential bullish market sentiment," the proposal reads . "The issue lies in the liquidity crunch inherent in the exposure towards stablecoins deployed through RWAs."
In order to stabilize the proposal, a slate of changes were approved that will go into effect tomorrow , March 10th, including increasing the dai savings rate from 5% to 15% and increasing the stability fees of its core vaults around 9-10% each. Changes will also be implemented for the Spark Effective Borrow APY and the Peg Stability Module.
While the changes are meant to be temporary, there appears to be no automatic mechanism for the reversion of the fees. GFX Labs, a blockchain research and development company, argued on the proposal's discussion page that the changes were "directionally correct," but also that the company "...thinks the extent of the moves is quite large for a single action, and could result in dislocations and disruption in the markets."
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