MakerDAO Adopts Enhanced DAI Savings Rate Proposal With 99.93% Support
- MakerDAO’s proposal to increase the DAI savings rate has been approved and the interest rate will temporarily increase to 8%.
- The vote received almost absolute support from the community (99.93% of the community agreed).
- EDSR is determined based on DSR and DSR usage rate and decreases over time as usage increases, until EDSR eventually disappears when usage is high enough.
In the governance vote that ended on Thursday, the MakerDAO community voted on a proposal to introduce an Enhanced Dai Savings Rate (EDSR), which could temporarily increase the interest rate of DAI holders up 8%. The proposal received a total of 99.93% of the votes in favor.
As suggested, The Enhanced Dai Savings Rate is a system to temporarily increase the effective DSR available to users in the early bootstrapping stage when DSR utilization is low. The EDSR is determined based on the DSR and the DSR utilization rate, and represents over time as the utilization increases, until it eventually disappears when utilization gets high enough. EDSR is a one-time, one-way temporary mechanism, which means that the EDSR can only decrease over time, it cannot increase again even if DSR utilization goes down.
The EDSR ensures that DAI holders pioneering the adoption of DSR will receive more fair value from the incremental profits generated by the protocol. In turn, this could help drive adoption and possibly push other DeFi protocols to quickly integrate DSR while EDSR is live.
Uilization rate here can be understood as the proportion of DAI locked into DSR / total supply of DAI in the market. Thus, it is likely that the interest rate of 8% will be maintained until 20% of the total supply of DAI is locked into the DSR.
In addition, the founder of Rune also said that this proposal could be put to the test and if it failed, the Stability Advisory Council could immediately deploy a vote to urgently shut down the program.
MakerDAO started using more income generating assets like government bonds to back DAI and share a portion of the income with users. The protocol increased the DSR to 3.49% last month to increase the appeal of DAI but has since quickly reduced it to 3.14%.
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