MakerDAO Users Vote on ‘Stability Fee’ Increase as DAI Stablecoin Peg Wobbles
The plans, which would continue a practice begun in February, aim to shore up the exchange rate of USD-pegged Dai.
Decentralized Autonomous Organization (DAO) MakerDao (Maker) will let users vote on whether or not to raise a fee used within its Dai (DAI) stablecoin, the organization confirmed in a blog post on Mar. 4.
Dai, which is a USD-backed stablecoin, is different from Maker’s utility token, MKR, which is trading at $678 by press time. The stablecoin DAI is in part used for loans via a structure administered by Maker known as a collateralized debt position (CDP).
Now, in order to correct trailing exchange rates for Dai, which have dropped below $1, developers want to introduce a hike in the fees Maker collects when Dai is created through said CDPs.
Known as the “Stability Fee,” the current cut is 1.5 percent, having risen from 0.5 percent in February.
However, this time the fee could subsequently rise as high as 5.5 percent, depending on the success of an initial hike to 3.5 percent, which users will vote on this week.
“Informal discussions with several large Dai market makers have suggested that inventory levels have run high, and balance sheet capacity has diminished,” the blog post explains, continuing:
“Informal polling through various community channels has also shown strong support for an increase.”
Maker suggests the impact of fee increases will not be off-putting, and could even be temporary, depending on future market conditions.
The MKR token rebounded significantly in price through last month, after hitting lows of $364 on Feb. 1. The token is currently the sixteenth-largest cryptocurrency by market cap, according to CoinMarketCap.
At press time, DAI is trading at $0.99, down about half a percent on the day.