MakerDAO Freshly Mints $1 Million DAI Tokens and May Triple Before the Year Ends
The Ethereum blockchain is currently seeing some very large loans as recently, the MakerDAO’s fifth-largest loan position has reportedly minted a fresh batch of one million new DAI tokens. The loan is worth $996,216 with a meager charge of 73 cents.
Less than a month ago, towards the end of June, there was another occurrence of 1 million new DAI tokens issued by the MakerDAO’s seventh biggest Collateralized Debt Position (CDP). On the network, a CDP is a loan available to customers that involve the fixing of Ether (ETH) in a sort of exchange that lets these users withdraw DAI stablecoins from the network.
Reports have it that these huge loans are becoming more frequent because the price of ETH has been shooting up with the current pattern of events, MakerDAO Foundation’s Head of Proprietary Trading, Joe Quintilian, has said he expects a lot more minting to happen this year. According to him:
“I would not be surprised to see a $3 million mint by end of the year. Minting high dollar amounts has been steadily increasing over the past year.”
Michael McDonald, the designer of mkr.tools, an analytics platform for DAI, has expressed optimism about the possibility of a more bullish DAI market. He said:
“I think DAI supply will continue to grow as markets stay bullish. If it starts hitting that 100 million and people still want to draw more DAI, you may have to really increase the stability fee. It all depends on what the governance decides to be about that.”
At the moment, the DAI supply available is around 91 million and it is expected to break its 95 million all-time high sometime in the near future.
Speaking on the increase and somewhat corroborating Quintilian’s comment, McDonald has expressed specific thoughts on the possible reason for the surge.
“My guess is as the price of ETH has gone up significantly over the past few months, CDPs are heavily over-collateralized so owners now feel comfortable drawing out more DAI against their ETH collateral.”
The Maker DAO network has a stability fee which largely keeps things in check. The fee is a compulsory interest charge for all customers who choose to close out all their DAI loans. The 18.5 percent fee is largely responsible for controlling demand and keeping the DAI valuation in check.
Upper Limit Should Probably be Revisited
McDonald has further added that it might be necessary for the current 100 million DAI cap to be reviewed upwards in order to accommodate requests as there is a perpetual recorded increase. McDonald says that a lot of that will be predicated on the introduction of the multi-collateral DAI to the network.
“It depends on how far along multi-collateral DAI is. If the multi-collateral DAI is not going to launch until Q4 then I’d be all for raising the debt ceiling to allow for some amount of growth in the meantime.”
The multi-collateral DAI will allow users mint new DAI tokens by locking other digital assets apart from Ether. The design will ensure that each of these cryptocurrencies will have its own specific limit which is a debt ceiling.
This will bring more backing for the DAI tokens as there will be more cryptocurrencies supporting it. Whether or not multi-collateral DAI tokens will now be used rests fully in the hands of MakerDAO voters who currently have MKR governance tokens.