Screenshot of MakerDAO executive vote announcement on X. Source: MakerDAO

MakerDAO, the organization behind the Maker (MKR) token, has approved an “Executive Vote” to introduce temporary fee adjustments aimed at strengthening the protocol due to increased market volatility. The decision comes in response to a rapid decrease in the supply of Dai (DAI) stablecoin from $5 billion to $4.4 billion within the last seven days.

Screenshot of MakerDAO executive vote announcement on X. Source: MakerDAO

The proposal, put forward by BA Labs, a member of Maker’s Stability Advisory Council, seeks to expedite 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, the use of RWA vehicles as collateral could present liquidity challenges if the selling pressure on Dai continues.

The proposed measures include changes to Maker Vaults, the SparkLend DAI Borrow Rate, the Peg Stability Module (PSM), the Dai Savings Rate, and the Governance Security Module (GSM) Pause Delay. Notable adjustments include raising stability fees on different collateral assets from 15% to 17.25% and increasing the SparkLend DAI Borrow annual percentage yield from 6.7% to 16%.

The adjustments are set to go into effect on March 10 at 7:55 pm UTC. While considered temporary, there is no automatic process for reverting the fees. Some community members expressed concerns about the magnitude of the changes, fearing potential market dislocations and disruptions. The MakerDAO ecosystem aims to maintain stability amid the evolving market conditions and anticipates potential unpredictable user actions.

By Urik

My professional background is in public relations and I am the founder of Cryptochating. My journey into blockchain technology started four years ago, and I haven't looked back since then. The future of decentralized technology is incredibly fascinating to me, and I am passionate about communicating how it will change the world.

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