MakerDAO, the organization responsible for the development of the MKR token, has recently passed a new Executive Vote aimed at implementing temporary fee adjustments. These adjustments are intended to strengthen the protocol in response to increased market volatility and bullish sentiment, which have resulted in a reduction in reserves for the stablecoin Dai (DAI).
The proposal for these fee adjustments was put forth by BA Labs, a member of Maker’s Stability Advisory Council, in light of the rapid decrease in Dai supply from $5 billion to $4.4 billion in the past week.
The proposal suggests expediting the approval process for a stablecoin stability measure if users choose to redeem a portion of the $1.1 billion in Real-World Assets (RWA) available on the protocol. While Dai is overcollateralized, using RWA vehicles as collateral may pose liquidity issues if the selling of Dai continues.
To address these concerns, MakerDAO plans to implement a series of changes, including raising the stability fees on various collateral assets registered on the platform from 15% to 17.25%. Additionally, the SparkLend DAI Borrow APY will be increased from the current 6.7% to 16%. These adjustments are scheduled to take effect on March 10th, 2024, at 19:55 UTC.
MakerDAO also intends to make PSM Adjustments that will reduce the cooldown period for Debt Ceiling increases from 24 to 12 hours. Other measures include an increase in the Dai Savings Rate to 15% and a decrease in the GSM Pause Delay from 48 hours to 16 hours to facilitate faster implementation of future adjustments.
While these changes are temporary, there is no automatic process for reverting the fees. GFX Labs, a blockchain research and development company, has expressed support for the proposed adjustments but has raised concerns about their magnitude, fearing possible market dislocations and disruptions.
Overall, these measures are aimed at enhancing the stability and resilience of the MakerDAO protocol during a period of heightened market volatility and fluctuations in Dai supply.