MakerDAO, the organization responsible for the development of the MKR token, has successfully passed a new Executive Vote to implement temporary fee adjustments in order to strengthen the protocol amidst heightened market volatility and bullish sentiment. This decision was made in response to a significant reduction in the supply of the stablecoin Dai, which decreased from $5 billion to $4.4 billion within the past week. The proposal for these adjustments was put forth by BA Labs, a member of Maker’s Stability Advisory Council.
The proposal aims to expedite the approval process for a stability measure for the stablecoin if users choose to redeem a portion of the $1.1 billion in Real-World Assets (RWA) available on the protocol. Although Dai is overcollateralized, using RWA vehicles as collateral can potentially lead to liquidity issues if selling of Dai continues.
To address these concerns, MakerDAO plans to make several changes. Firstly, the stability fees on various collateral assets registered on the platform will be raised from 15% to 17.25%. Additionally, the SparkLend DAI Borrow APY will be increased from the current 6.7% to 16%. These adjustments are set to take effect on March 10th, 2024, at 19:55 UTC.
Furthermore, MakerDAO intends to implement PSM Adjustments that will shorten the cooldown period for Debt Ceiling increases from 24 to 12 hours. Other measures include increasing the Dai Savings Rate to 15% and reducing the GSM Pause Delay from 48 hours to 16 hours to enable quicker implementation of future adjustments.
It is important to note that while these adjustments are temporary, there is no automated process for reverting the fees. GFX Labs, a blockchain research and development company, expressed support for the changes but raised concerns about their magnitude, fearing potential market disruptions.
Overall, MakerDAO’s decision to implement these fee adjustments reflects their proactive approach in responding to market dynamics and ensuring the stability and resilience of the protocol.