MakerDAO, the organization responsible for the development of the MKR token, has passed a new Executive Vote to implement temporary fee adjustments in order to strengthen the protocol amidst increased market volatility and bullish sentiment. This has resulted in a reduction in reserves for its stablecoin, Dai (DAI).
The proposal was put forward by BA Labs, a member of Maker’s Stability Advisory Council, in response to a rapid decrease in Dai supply from $5 billion to $4.4 billion in the past week. In order to address potential liquidity issues caused by the selling of Dai, MakerDAO aims to expedite the approval process for a stablecoin stability measure if users choose to redeem a portion of the $1.1 billion in Real-World Assets (RWA) available on the protocol.
The proposed measures include changes to Maker Vaults, SparkLend DAI Borrow Rate, the PSM, the Dai Savings Rate (DSR), and the Governance Security Module (GSM) Pause Delay. Specifically, the stability fees on various collateral assets registered on the platform will be increased from 15% to 17.25%, and the SparkLend DAI Borrow APY will be raised from 6.7% to 16%. These changes are set to take effect tomorrow, March 10th, 2024, at 19:55 UTC.
Additionally, MakerDAO plans to implement PSM Adjustments that will shorten the cooldown period for Debt Ceiling increases from 24 to 12 hours. The Dai Savings Rate will be increased to 15%, and the GSM Pause Delay will be reduced from 48 hours to 16 hours to facilitate faster implementation of future adjustments.
It is important to note that while these adjustments are temporary, there is no automatic process for reverting the fees. GFX Labs, a blockchain research and development company, has expressed support for the changes but has raised concerns about their magnitude, fearing potential market dislocations and disruptions.
In conclusion, MakerDAO is taking proactive measures to address the decrease in Dai supply and ensure the stability of its ecosystem amidst market volatility.