Developers and investors contributing to Ethereum-based programmatic lending protocol MakerDAO are discussing the fourth hike to the fee charged to users of its USD-pegged stablecoin DAI.
The persistent imbalances in the supply and demand of the token since last month have resulted in DAI trading under $1 on exchanges—hitting lows of $0.96 on major exchanges like Coinbase.
Issued through open-source software, DAI leverages a “Stability Fee” which charges an outstanding fee proportional to the DAI amount being returned. The fee is payable in DAI or MKR tokens. However, MKR holders join the decision-making on how the protocol that creates DAI must function as well as “stake” their tokens in votes.
The holders of MKR have ratified three proposals to increase the fee incrementally in recent weeks. The last increase was so far the highest, raising the Stability Fee to 3.5% and prompting concerns on whether the MakerDAO protocol is capable of supporting a stable digital currency.
According to MakerDAO Foundation risk management lead Cyrus Younessi, due to Friday’s fee hike, DAI prices were “trending in the general right direction pointing to a chart depicting DAI market value weighted across several different cryptocurrency exchanges.”
However, noting that OTC trades of DAI were unaffected by the increase and persist well below the dollar mark, Joseph Quintillian of Distributed Capital Partners stated:
“I’m not seeing good trades above one or even close to $1 … We’re kind of in this $0.95 to $0.99 [over-the-counter range] but nothing over $0.99 yet.”
Wyre Capital head of research Louis Aboud-Hogben noted that while “spot prices have moved up a bit … we haven’t been able to clear any trades.”
“It’s important we don’t get lured into a false sense of security here,” Aboud-Hogben added.
As such, MakerDAO Foundation founder Rune Christensen believes more pointed action has been warranted by MakerDAO token holders. “If we’ve seen no effect, I’m of the opinion that we should do a 4 percent increase,” Christensen stated, adding that previous Stability Fee hikes only had “superficial effects on markets.”
The founder suggested a vote for a more measured raise of 2% from the present 3.5%. However, some community members regard the suggestion as too hasty.
MakerDAO Foundation head of core community Richard Brown directed the discussion to be further tackled on the community Reddit channel.
“Let’s make sure this debate doesn’t peeter out and that it continues on our Reddit channel … [Our decision] needs to be scientifically-based,” Brown emphasized.