Block Analitica proposed to the MakerDAO community to raise the rate of return on DAI stablecoins locked in smart contracts of the platform to 3.33% per annum.
An important set of parameter changes for several Maker Vaults will be included in an upcoming Executive Vote, in accordance with the most recent publication of Stability Scope Parameter Changes by @BlockAnalytic.
→ https://t.co/ZVK1zKiFEn pic.twitter.com/GHGvUkU4Kc
— Maker (@MakerDAO) May 26, 2023
The Block Analitica proposal was supported by the MakerDAO (Risk Core Unit Team) risk management team. The initiative involves increasing the DAI Savings Rate (DSR) from the current 1% to 3.33%.
The DSR smart contract allows DAI holders to lock stablecoins for profit according to a set interest rate. The system is one of the main levers of the platform’s monetary policy.
“This creates an entirely new direction for incentives to balance the supply and demand of DAI. This model allows you to allocate capital more efficiently, while fulfilling its main role – providing users with strong and decentralized stability, ”says the MakerDAO blog.
Payments to users under the DSR are accrued from the stabilization fees that are levied on owners of Vaults smart contracts.
The last time the MakerDAO community raised the DSR was in December 2022. In February, the developers reported that over 35 million DAI were received in the smart contracts of the platform in one month against the backdrop of an increase in the rate.
Raising the DSR to 1% led to more than 35 million DAI being deposited in a month.
The DSR is a Maker Protocol module that can be plugged into any other DeFi tool, extending the baseline yield of DeFi to a broader group of users.
How can a DeFi protocol connect to the DSR? ↓ pic.twitter.com/vXwcKFCuP6
— Maker (@MakerDAO) February 2, 2023
Block Analitica founder Primoz Kordez noted that if accepted, the proposal would raise rates of return across the decentralized finance segment.
According to him, DAI is relatively risk-free, unlike protocols like Aave and Compound. Therefore, the latter will have to adjust the parameters in order to attract users.
Stablecoin suppliers at Aave and Compound earn around 2%-2.5% and a decent amount of capital should flow to DAI DSR to push supply rates to a range of 3.5%+. I personally think the supply rates should be at least 50bps above DAI DSR as risk premium is higher (rehypothecation)
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— Primoz Kordez (@PrimozKordez) May 26, 2023
Recall that in May 2023, MakeDAO developers launched the Spark Protocol, a DAI-oriented liquidity marketplace.
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