MakerDAO is voting on raising the Dai Savings Rate (DSR), which is the interest rate paid to dai stakeholders. In addition, they are voting to increase the annual reward for its DAI stablecoin by up to 1%.
MakerDAO members will vote for 1%, 0.75%, 0.5%, or 0.25% rate
According to a proposal presented by the MakerDAO Open Market Committee, DAO members will vote on whether to vote the current yield rate of 0.01% to one of four rates: 1%, 0.75%, 0.5%, or 0.25%.
Voters can also choose to preserve the present yield of 0.01% or to reject the idea entirely. At the time of writing, 99.7% of votes favoured raising the rate to 1%. It may change as more member vote. However, the outcome might change as additional ballots are cast. The vote is scheduled to conclude on December 1.
The committee stated that it proposed updating dai staking yields to be on par with stablecoin returns given by other DeFi systems, such as lending platforms Aave and Compound. According to the plan, a more significant savings rate would also assist ensure that there is adequate liquidity to preserve the stability of the dai stablecoin.
The voting is taking place as yields in decentralized finance (DeFi) have fallen due to a drop in demand for crypto financing. Meanwhile, conventional market yields have risen considerably due to the Federal Reserve’s aggressive interest-rate-hiking campaign, exacerbating capital flight from DeFi.
Investors in USDC may earn little more than 1% each year by lending their shares. It is a far lower yearly rate than investing in US Treasury bonds, which yield roughly 4% and are considered the safest investment.
According to Block Analitica statistics, average asset supply rates on DeFi lenders have grown marginally over the last month. The committee ascribed the increase in supply rates on lending processes to a decline in asset liquidity induced by investors fleeing to more attractive and safer returns given by US Treasury notes. For example, 1-year US Treasury notes currently pay a 4.7% interest rate.
The reward may be increased since Maker increased its income by putting some of its $7.7 billion reserves to work. The plan entails collaborating with institutional investors like Coinbase and directing funds to various yield-generating investment strategies, including government bonds.
According to renowned MakerDAO members Sebasien Derivaux and Sam MacPherson, a portion of the newfound wealth should be transferred to DAI holders to make the stablecoin more appealing to crypto investors.
As Maker invests in assets other than digital assets, MacPherson argues in a tweet that it may offer a mechanism to capture higher rates in traditional markets while limiting capital outflows from crypto.
