DEFIMARKET

MakerDAO Core Team Proposal: Increase DAI Savings Rate to 3.3%, Community Asks: Will DAI Circulation Increase or Decrease?

share
MakerDAO Core Team Proposal: Increase DAI Savings Rate to 3.3%, Community Asks: Will DAI Circulation Increase or Decrease?

The decentralized stablecoin protocol MakerDAO is preparing to increase the savings rate for DAI to 3.3%.

Table of Contents

The decentralized stablecoin protocol MakerDAO is preparing to increase the savings rate for DAI to 3.3%.

The official MakerDAO Twitter account recently announced, "DAI holders are about to welcome a 3.33% DSR."

Against the backdrop of the Federal Reserve's continuous interest rate hikes, the core development team of MakerDAO, Block Analitica, proposed to raise the savings rate (DSR) for DAI to 3.3%.

The savings rate (known as DAI Saving Rates, DSR) refers to the interest rate on DAI deposits, where MakerDAO provides a savings contract allowing users to earn interest by depositing their DAI, with the current rate at 1%.

MakerDAO tweeted:

"DAI holders, get ready for a 3.33% DSR. If the proposal is approved, DSR will increase from 1% to 3.33%."

The DSR was designed to address short-term market conditions, initially to stabilize the price of DAI at a 1:1 peg to the U.S. dollar.

However, with MakerDAO now incorporating USDC and USDT as reserve assets, price stability is no longer a major concern, making DSR appear to be an alternative interest rate tool.

According to the proposal, this voting includes not only DSR but also an increase in stability fees (SF) for certain crypto assets, including:

  1. DSR to 3.33%
  2. Set ETH-A SF to 3.58%
  3. Set ETH-B SF to 4.08%
  4. Set ETH-C SF to 3.33%
  5. Set WSTETH-A SF to 3.58%
  6. Set WSTETH-B SF to 3.33%

Stability fees are fixed interest rates for borrowing (collateralizing assets → DAI), and the rates vary based on different assets and collateralization ratios. Therefore, some in the community question whether raising stability fees will decrease DAI's market share, leading to increased costs to mint DAI, potentially driving users to other protocols.

However, member monetsupply.eth from Block Analitica believes that increasing the DSR will increase the circulation of DAI.

His logic is straightforward: with DSR rising from 1% to 3.33%, more people will mint DAI and deposit it into MakerDAO's savings contract to earn interest.

monetsupply.eth responded:

"I don't think it will decrease DAI circulation, but rather increase it. However, the ratio of ETH/wBTC collateralization to mint DAI will decrease (it's not very high). If the impact is significant, adjustments can be made."