MakerDao Users Approved Amendment To Dai’s Stability Fee System To Reduce The Liquidity ‘Wastage’ & Motivate CDP Closures

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A recent vote by MakerDao resulted in a 2% increase in the DAI stability fee to 3.5%. The Maker Dao’s team this week announced an amendment to the project’s stability fee system. The new adjustment is intended to reduce churn in the stablecoin ecosystem and incentivize CDP holders to close their positions.

According to the results of a recent poll, done on March 7, MakerDao (Maker) users voted to raise Maker’s Dai (DAI) stability fee to 3.5 percent.

MakerDao, a Decentralized Autonomous Organization (DAO) based on the Ethereum (ETH) blockchain, first opened voting on the matter to users on March. 4.

In response, Dai announced on Thursday that users had approved an increase of 2 percent for the stability fee — from 1.5 percent to 3.5 percent — “until the trend in the [Dai’s] peg is corrected.” According to Maker, one of the key reasons for the proposal was that Dai had slipped below the $1 peg on exchanges.

This stablecoin is based on the ERC-20 standard and is pegged 1:1 to the dollar. A Maker-managed collateralized debt position (CDP) is part of the way Dai is used for loans.

Specifically, MakerDao proposes to increase the Stability Fee in order to motivate CDP closures (thereby reducing outstanding Dai).

As noted in the proposal, the stability fee was already raised twice in February, each time by 0.5 percent. Nevertheless, the combined increase of 1 percent was negligible, according to the proposal.

On CoinMarketCap, Maker’s governance utility token MKR is the 16th largest cryptocurrency. At press time, the token is trading around $675, down around 1 percent.

A fraction of a percent has been lost in DAI’s price over the past 24 hours, as of press time.

Via this site.


Chris Munch

Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.