The Circulation of Maker’s DAI Stablecoin Shrinks, MakerDAO Introduces Enhanced DAI Savings Rate
The circulation of Maker’s DAI stablecoin has decreased by a third in the past year, prompting MakerDAO to take action to boost demand. The protocol’s community has approved the introduction of the Enhanced DAI Savings Rate (EDSR), which will temporarily increase the interest rate for DAI holders to as high as 8%. This move comes as the broader stablecoin market has also experienced a downturn.
Key Points:
- MakerDAO is introducing the Enhanced DAI Savings Rate (EDSR) to increase demand for its DAI stablecoin.
- The circulation of Maker’s DAI stablecoin has shrunk by a third in the past year.
- The EDSR will temporarily increase the interest rate for DAI holders to as high as 8%.
- The broader stablecoin market is also experiencing a downturn.
- MakerDAO aims to generate sustainable growth in new demand and capital inflows.
MakerDAO has been backing DAI with yield-generating assets and paying a portion of the revenue to users. However, they have not been able to generate significant growth in demand and capital inflows. The EDSR aims to address this by ensuring that DAI holders receive a fair amount of value from the increased returns generated by the protocol. The EDSR rate will be determined based on deposits in the DSR facility and will decrease over time as usage increases.
Hot Take:
The introduction of the Enhanced DAI Savings Rate is a strategic move by MakerDAO to incentivize DAI holders and drive demand for the stablecoin. By increasing the interest rate, MakerDAO aims to attract more users and capital inflows, ultimately boosting the circulation of DAI. This is a crucial step in maintaining the stability and growth of the decentralized finance ecosystem.
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