MakerDAO is a business corporation which has designed an impressive platform by deploying Ethereum based algorithmic blockchain that works on the smart contract. The company has designed the Ethereum-based stablecoin DAI – an ERC-20 token, and along with the governance token Maker(MKR) that allows user to use the Ethereum (ETH) tokens as collateral; this process creates dollar-pegged Dai tokens that are loaned to users and in return the platform charges the stability fee when Dai is used for loans. From the past few months, MakerDAO has been trying to keep Dai’s value stable by increasing the interest rates that users pay which is known as a stability fee. Now, those interest fees have reached 19.5%.
It is important to note that this year, during March, Maker already raised the stability fee twice, first to 3.5% and then to 7.5% per year. In April, the fee structure again changed and increased by another 4% in the fifth vote. The vote brought it to 11.5%. Further votes caused the rate of up to 19.5% in June starting.
In the latest update, the company has issued the executive vote once again in regards to the stability fee for MakerDAO’s ethereum blockchain based decentralized stablecoin DAI. This time the executive voting process is not to increase the fee structure but to reduce the stability fee by 2%. The information of the vote announced through the organization’s blog on May 17.
As per the information, the dropping of the fee is a result of the MakerDAO governance call that took place on 16 May 2019. The continuous approval of vote system enables the Executive Vote to continue until the number of votes surpasses the total in favor of the previous Executive Vote which increased the stability fee. So, this time if the approval gets the green light then users may enjoy a cut-off by 2% from 19.5% and would only need to shell out 17.5%.
MakerDAO is Content to Improve the Customer Attention: Lowering the Stability Fee
Reportedly, this year during the last week of April, Steven Becker, the CEO and president of MakerDAO mentioned that the interest fee depends on the supply and demand- the most important economic force which decides the variation in the product with its fee structure.
MakerDAO is continuously tackling the issues and exploring new opportunities by changing the yearly stability fee in an attempt to improve the token’s peg to the U.S. dollar especially after its exchange price has been seen moving above the $1 level.
Becker said that the price is hung below $1 due to its suppliers that have overtaken the demand for Dai. So, in order to incentivize CDP owners to close out their positions and thus reduce the supply, the MakerDAO community has been increasing the Stability Fee regularly.
Becker further said that DAI’s value had stabilized as of the beginning of May which was previously struggling to maintain its peg. Now, MakerDAO is considering to reduce the yearly stability fee while improving the token’s peg to the U.S. dollar.
Allegedly, from April there are rumors about the ongoing internal issues which are have started to occur over the project and the internal team. The concerns have been revealed by the company’s former CTO Andy Milenius in an open letter.