Will the sudden drop in DAI supply cause a liquidity crisis? MakerDAO implements multiple fee adjustments, and annualized profit estimates skyrocket

Author: Nancy, PANews

In order to deal with the potential risks caused by the significant reduction of the stablecoin DAI, MakerDAO has recently implemented a series of fee adjustments, including increasing the DAI Savings Rate (DSR) to 15%, and increasing stability fees of more than 8% to 10% in multiple core vaults. Rate. With the formal implementation of this proposal, what impact will it have on MakerDAO?

The supply of the stablecoin DAI has dropped significantly in recent times. Maker Burn data shows that as of March 11, the total supply of DAI has fallen to $4.5 billion, the lowest level since August last year. In this regard, the proposal recently launched by BA Labs, the core development team of MakerDAO, pointed out that although the stablecoin reserves used to maintain liquidity and the reserves deployed to RWA are sufficient to maintain the pressure generated by potential bullish market sentiment, the problem lies in the stability of deployment through RWA The inherent liquidity crunch of the currency.

According to Dune data, Maker’s investment in the RWA sector has exceeded US$1.77 billion. However, due to the product characteristics of RWA, there are certain restrictions on the daily redemption of mortgaged crypto assets. Once the supply of DAI continues to decrease, it may trigger the risk of liquidity crunch. At the same time, MakerEndgame data shows that the stablecoin reserves of the PSM (Peg Stability Module) launched for DAI liquidity have also reached more than 790 million US dollars.

In response to the impact of potential excessive DAI demand caused by further market volatility and bullish sentiment, BA Labs proposed a fee adjustment proposal, which was officially implemented in the early morning of March 11 after being voted on that day. According to the proposal, key changes include increasing DAI’s savings rate from the original 5% to 15%, and implementing stability fee adjustments to its core treasury, which is expected to increase by approximately 9-10%.

In addition to approving an increase in the stable rates of mortgage assets such as ETH, WSTET and WBTC vaults to 15% to 17.25%, DAI’s savings rate has also been increased from the original 5% to 15%, making holding DAI more attractive, thereby boosting demand and alleviate downward pressure on prices. At the same time, MakerDAO will also shorten the PSM cooling-off period for increasing the debt ceiling from 24 hours to 12 hours, thereby increasing USDC deposits and DAI minting throughput; the GSM suspension delay will be shortened from 48 hours to 16 hours for faster implementation. Future adjustments. In addition, Spark Lend, the lending market in the Maker ecosystem, has also implemented relevant changes, increasing the annual interest rate for DAI borrowing from 6.7% to 16%

With the passage of the new interest rate proposal, Maker Burn data shows that in the past 24 hours, Maker's annualized profit estimate increased by 81.8% to US$182 million, annualized fee income increased by 97.2% to US$437 million, and the PE estimate increased from 22.36 dropped to 13.4.

In addition, affected by this, CoinGecko data shows that the Maker token MKR has increased by more than 33.2% in the past 24 hours. It is worth mentioning that in addition to boosting token prices through fee adjustments, MakerDAO founder Rune Christensen has also been selling tokens such as LDO and SHIB worth hundreds of thousands or even millions of dollars this month. It has continued to increase its position by over 1,900 MKR, with the current value exceeding US$5.14 million.

However, many practitioners have given different views on this plan. For example, Mindao, the founder of dForce, pointed out that the current funding rate continues to be high, and stablecoins continue to be sucked by arbitrage. If the minting volume cannot be stabilized, the income of the agreement will be ineffective.

“Since the income in the DSR system is 5% of the U.S. debt, if too much USDC rushes in and takes away 15% of the interest, which is equivalent to a subsidy of 10%, then the income of the agreement will decrease. Currently, the RWA part accounts for 25%. This part is Those who post this, need to pay attention to the changes in the share of this part." Super Junze, the host of Benmo Community, reminded.