THELOGICALINDIAN - Maker voters decisions to accompany aback adherence fees is acceptable for their pockets but endangers DAI
DAI is once again trading able-bodied aloft its adapted $1 peg as MakerDAO babyminding voted to access adherence fees, banishment buyers to attempt for DAI already in existence.
Do or DAI Scenario
MakerDAO’s built-in stablecoin DAI is trading at a abrupt premium, authoritative activity difficult for its users. All stablecoins bend from their peg from time to time, but DAI is belled for declining to backlash quickly.
The stablecoin captivated its peg for a few weeks, but that bound afflicted back the MakerDAO voted to accession the adherence fee for all accessory assets.
The accommodation approved to accommodate MKR holders, the protocol’s built-in babyminding token, with a antecedent of amount abduction as adherence fees are acclimated to buy and bake MKR. Adherence fees had been nil for months until MKR investors absitively it was time to accompany aback the amount abduction mechanism.
Increasing the adherence fee reduces the appeal to excellent new DAI. However, the badge is an alive aspect in some of the better crop farms at the moment, which creates abiding buy burden for the stablecoin.
With little new DAI advancing in and appeal actual constant, basal economics dictates that the amount will access until it alcove a akin area cipher wants to buy it anymore.
Further, the alone way to accomplishment DAI’s peg is by minting DAI (at $1) and affairs it for an actual profit. With a adherence fee in place, the allurement to do this is minimized because the fee eats into the accumulation margins of arbitrageurs.
The accommodation to accession the adherence fee, alive that DAI already struggles with its peg, reflects aborigine affect that amount abduction is added important than the token’s stability.
However, accessory measures are actuality put in abode to annul this.
Maker babyminding voted to abate defalcation ratios for USDC and PAX, while additionally accretion the debt beam for both assets. The adapted aftereffect is for absolute vault/CDP owners to clasp added DAI out of their USDC and PAX with the aplomb that their accessory is safe acknowledgment to the lower defalcation threshold.
All that affairs is whether these accomplishments construe to DAI advancing afterpiece to its peg. If it does, this will be a win-win book for Maker as MKR amount abduction is re-embedded after causing abiding accident to the stablecoin.
