Majority of Voters Agree to Raise the Maker Stability Fee to 3.5% per year, Up from 2% Previously
MakerDao is one of the most actively growing projects in the crypto market despite the ongoing prolonged bear market that led to the shut down of businesses or layoffs.
It is further reflected in the fact that currently, MakerDao accounts for more than 2 percent of total circulating supply of second largest cryptocurrency Ethereum with over $289 million Ether locked in Maker contracts as CDP.
When it comes to price as well, Maker has been enjoying a good ride, however, this time MakerDao did got knocked down a peg.
DAI, the stablecoin which is built on Ethereum blockchain and pegged by $1 USD recently slid own this mark. The $1 USD equivalent is maintained through pricing mechanisms that are built into smart contracts and whenever DAI is worth more than $1, the contract pricing mechanisms work to take the price down to $1 level and similarly when DAI is worth less than $1, the price is increased.
Now, in order to maintain this, MakerDAO has proposed stability fee increase of 2 percent to 3.5 percent. Stability fees are charged when a user makes use of the MakerDAO platform in order to create Collateralized Debt Position (CDP) contracts. At the time of CDP creation, a user must have at least 150 percent of the value of DAI created on the basis of ETH’s current price.
This latest proposed hike in fee is about 4 times more than the last time when votes were asked for a 0.5 percent increase in the stability fee.
The Majority is with the Increase in Fee
The increasing instability fee has been taken into consideration because of the exchange price persisting below $1, high inventory levels among the market makers and prop desks, and no significant impact from the previous increase in fee.
According to the official announcement:
“An examination of the available data strongly suggests a Stability Fee increase is warranted. The exchange price of Dai across several major exchanges, such as Coinbase Pro and Bitfinex, has been consistently hovering in the $0.975 to $0.985 range for 1-2 months. Decentralized exchanges with sufficient volume/liquidity, such as Eth2Dai, also confirm the same discrepancy.”
The voting for stability fee is currently now being cast for two options: Vote Yes for the proposal to signal your support to increase the stability fee by 2% to 3.5% per year or Vote No to the proposal and to support the current stability fee set to 1.5 percent per year.
Though at the time of writing, there are still a few hours left before voting is closed, the “Ayes” have it clearly with 42,557.28 MKR while only 9.99 MKR doesn’t want the fee to be increased.