MakerDAO to Increase Fees Above 10% in Bid to Stabilize DAI Stablecoin

Published on by Coindesk | Published on

Investors who hold tokens in the programmatic lending protocol MakerDAO appear likely to approve a fifth fee increase that would further raise the cost of platform's US dollar-backed stablecoin DAI. Since Monday, five different options have been presented to MakerDAO token holders, all of which suggested different possible increases to the platform's "Stability fee," the most extreme being a 4 percent increase.

Once ratified, the 11.5 percent stability fee will make it more expensive for users to take out programmatic loans of DAI by locking up ether as collateral.

"The DAI peg has continued to be weak this past week, pretty much as weak as it has ever been, hovering around 96 cents. DAI supply started to trend back up as the ETH price continued to go upward. [There is] lots of borrowing and lots of weakness in the DAI price."

With all increases having proved ineffective in stabilizing the DAI peg, some users are now calling for a different approach to reducing circulating DAI supply.

This suggestion to change the hard supply cap of 100 million DAI was also raised as a point of discussion in today's MakerDAO governance and risk call.

"I'd say if we don't see an improvement in the DAI price by next week we consider reducing the debt ceiling in addition to a raise," wrote Matthew Light in the call chatroom.

Currently, only 100 million DAI can be loaned out to users in exchange for ETH. The eventual plan is to introduce multi-collateral DAI whereby users can take out new DAI by putting up holdings of a variety of different cryptocurrencies - not just ETH - each with a unique "Debt ceiling."

"MakerDAO should want to accommodate as much debt ceiling and DAI generation as possible barring risk of collateral failing for the system. Messing with the DAI ceiling to affect the price of DAI seems like not the right approach," said Younessi.

"Using the DAI supply cap/debt ceiling is the functional equivalent of shutting down your app for new users. This is a bad idea Increase the costs until slows enough to stabilize the system." wrote Baker in today's call chatroom.

For this to work, Brown emphasized the importance of continued voter turnout by holders of the MakerDAO governance token each week until DAI peg stability is restored.

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