MakerDAO Will Increase DAI Stablecoin Fees 4%, Marking the Biggeset ‘Stability Fee’ Increase Yet
During a new crisis which was prompted by the prices of the DAI stablecoin going to under one dollar in the over the counter (OTC) and secondary markets, the token holders of MakerDAO have decided to increase the fees of the DAI stablecoin once more. Now, the fees of the service will be raised by 4%.
The startup is focused on taking out programmatic loans via its DAI token, which is an ETH-based token backed with USD. This is the fourth hike fee that the company has seen so far in its ecosystem. Now, users will need to pay 7.5% in order to close loans.
According to the White Paper of the company, the so-called stability fee exists to make the prices stable. This fee is an annual percentage yield which will be calculated on top of the current debt and it will be used on a burner smart contract.
As you might have guessed by its name, the burner contracts destroy the token which is being held in it. All tokens that go there cannot be taken out and they are destroyed from time to time. The main reason for the existence of this contract is to address any kind of imbalance in the supply and keep prices as stable as possible.
The Price Problem
As we have affirmed, the main problem is that the value of the DAI tokens is dropping short of a dollar and no stablecoin can actually be very successful if it is being sold for a lower price, since they lost all their use. At the moment, DAI tokens are being traded for $0.95 to $0.99 USD at over the counter markets.
Cyrus Younessi, the lead risk manager at the MakerDAO Foundation, was one of the people who was pursuing the increase in the fees, which was the highest so far. According to him, the fee hike which was made last year was not successful enough, so they needed to create another one.
The logic here is that by burning tokens, the supply will be diminished and the price will go up again and remain steady at $1 USD. Many inventories of OTC desks are simply too saturated at this moment because there is simply too much DAI in circulation in the market, so they have to diminish the circulation in order to have the desired effect.
With a total of 37 votes, the MKR holders were able to implement the new fees just before hiking the fees up to 2% last week.
Richard Brown, MakerDAO Foundation’s head of core community, has affirmed that the company had more voters than before (which is sort of funny since 37 people is really not a lot, which may prove that this is a very centralized market). According to him, 73% of them were in favor of the fee hike.
The head of community affirmed that the governance system was very healthy and that the will of the majority would be made true. Now, all that is left is to wait and see if this new measure will be as effective as everybody is hoping.