Investors and developers who contribute to the ethereum-based programmatic lending protocol MakerDAO are debating a fourth increase to the amount charged to users of its U.S. dollar-pegged stablecoin DAI.
As a result of persistent imbalances in the token’s supply and demand since February, DAI has been trading below $1 on exchanges – hitting lows of $0.96 on major cryptocurrency exchange platforms such as Coinbase.
Issued via an open-source software, DAI uses what is known as a“Stability Fee” that charges an outstanding fee proportional to the amount of DAI being returned by the user. The fee can be paid in either MKR tokens or DAI. Holders of MKR, however, also participate in decision-making on how the protocol that produces DAI should function and “stake” their tokens in votes.
MKR holders have ratified three different proposals to raise this fee incrementally in the past few weeks. The last increase, executed on Friday, was by far the largest in the history of the project, raising the Stability Fee to 3.5 percent and prompting some concerns about whether the MakerDAO protocol can support a stable cryptocurrency.
In a weekly governance meeting today, risk management lead at the MakerDAO Foundation Cyrus Younessi noted that DAI prices as a result of Friday’s fee hike were “trending in the general right direction pointing to a chart depicting DAI market value weighted across “several different cryptocurrency exchanges.”
However, pointing out that over-the-counter trades of DAI have been unaffected by this fee hike and persist well below the dollar mark, cryptocurrency trader and partner at blockchain-focused VC fund Distributed Capital Partners,