Decentralized finance (DeFi) protocol MakerDAO has increased the DAI Savings Rate (DSR) to 1% in December 2022. 35 million DAI According to MakerDAO, it will be credited within a month.
Well, new suggestion There is talk of raising the DSR to 3.33%. The proposal was submitted by risk management firm Block Analytica and submitted by MakerDAO’s Risk Core Unit team. Proposals must be approved through an executive vote before changes can be applied.
DSR allows users to lock up MakerDAO’s DAI stablecoin into DSR smart contracts to earn interest. Basically, when a user borrows his DAI against collateral such as Ethereum (ETH) or wrapped Bitcoin (WBTC), they have to pay a stability fee to fund the DSR. The new proposal therefore also aims to change the stability fee for certain assets used as collateral.
According to MakerDAO, DSRMore is an important monetary policy instrument. This helps balance the supply and demand of DAI by encouraging or discouraging users from locking up their DAI. The DSR is often adjusted to address short-term changes in market conditions in the Dai economy.
Broader market impact
Block Analytica Executive I got it A rise in the DSR could be a “huge tailwind for the entire defi ecosystem,” he said on Twitter.
Sam MacPherson, Phoenix Labs co-founder and former lead developer at MakerDAO, believes that the rise in DSR is likely to affect the broader market.he tweeted:
“As Maker significantly raises the cost of capital, borrowing rates on your favorite lending platform will jump to around 4.5%.”
Lending protocols such as Aave and Compound allow up to 2.62% With stablecoins such as USD Coin (USDC), Tether (USDT), and DAI. Therefore, this change will allow MakerDAO to offer higher rates than its competitors in hopes of bringing in more capital.
This change could lead to higher borrowing rates for stablecoins in the DeFi ecosystem. If traders choose to exchange their stablecoins for DAI to deposit DAI into DSR contracts or exit other lending platforms, the overall supply of stablecoins will decrease. As a result, borrowing costs will rise.
A post first appeared on CryptoSlate stating that MakerDAO is about to raise the DAI savings rate from 233% to 3.3%.