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MakerDAO Hikes DAI Savings Rate, Ousts Paxos Dollar, Curbs Gemini Dollar in Reserve

CoindeskCoindesk2023/06/15 20:24
By:Krisztian Sandor

The move could redefine baseline interest rates in the DeFi space, spurring higher stablecoin lending rates and making leverage more expensive, one analyst noted.

MakerDAO founder Rune Christensen (Original image by Trevor Jones)

Decentralized finance () platform and stablecoin issuer MakerDAO has approved a hike in the reward to investors for holding its $4.5 billion DAI stablecoin and to reshuffle DAI’s reserve assets.

In an concluded Thursday, the MakerDAO community ratified a proposal to increase the DAI Savings Rate (DSR) to 3.49% from 1%, providing additional incentive for investors to hold and lend DAI instead of rivals like popular stablecoins such as USDC and USDT.

The decision happened as – led by a decentralized autonomous organization () where MKR token owners can vote on proposals – is undergoing a major transformation, including rearranging the backing assets of the DAI stablecoin. The platform increasingly invests in real-world assets such as short-term U.S. government bonds to boost revenues, redistributing a part of it to users through the DSR.

Hiking the reward is significant because it resets the baseline interest rate across the DeFi ecosystem, spurring higher yields from lending stablecoins while making leverage more expensive, , a treasury management provider to decentralized organizations.

It also underscores Maker’s strategic shift, Karpatkey said, because the proposal includes hiking fees on crypto assets to take out a DAI loan. “Originally a platform for leveraged long traders, Maker now positions itself as a bridge to real-world assets (RWA) yield,” said Karpatkey.

The decision will take effect on June 19.

The executive vote also included a slew of other proposals that influence the composition of DAI’s backing reserve assets.

The community effectively ditched Paxos Dollar () from the reserve by approving a decrease in its debt ceiling to zero. The has a substantial impact on fintech firm Paxos’ stablecoin, as Maker currently holds roughly half of USDP’s $1 billion supply.

The vote also ratified onboarding the BlockTower Andromeda RWA vault that would allow the of up to $1.28 billion in U.S. Treasuries for the reserve, doubling down on giving traditional financial assets a bigger role in DAI’s reserve.

In a separate concluded Thursday, MakerDAO voters also favored curbing Gemini Dollar () in the reserve to $110 million from $500 million. As CoinDesk , the result could jeopardize GUSD’s future as Maker holds 88% of the token’s supply.

Edited by Stephen Alpher.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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