Cryptocurrency

MakerDAO Conducts Fresh Polls to Increase ‘The Stability Fee’ as DAI Drops Below $1

Decentralized Autonomous Organization (DAO) MakerDAO (Maker) has upped its demands to increase one of its network fees, this time to 7.5 percent.

A Decentralized Autonomous Organization (DAO) is an organization that can fully function without the usual management structure that involves people. A DAO can also be defined as an organizational system that maintains and sustains itself based on smart contracts in which users determine its direction for the future by election. Maker is a decentralized autonomous organization built on Ethereum on which DAI operate. DAI, the ERC-20-based stablecoin is designed to maintain 1:1 peg with the U.S. dollar. The stablecoin is in parts used for loans through a system administered by Maker known as a collateralized debt position (CDP).

The platform intends to improve the stability of DAI by raising its ‘Stability Fee.’ Stability Fee is a charge imposed by the users of Maker when Dai is used for loans on its network. Critical factors which were considered for increasing the Stability Fee is first that the exchange price persists below $1. Secondly, there are high inventory levels among market makers and prop desks. Moreover, there has been no attributable impact from the previous Stability Fee increases.

“An examination of the available data strongly suggests a Stability Fee increase is warranted. The exchange price of Dai across several major exchanges, such as Coinbase Pro and Bitfinex, has been consistently hovering in the $0.975 to $0.985 range for 1-2 months. Decentralized exchanges with sufficient volume/liquidity, such as Eth2Dai, also confirm the same discrepancy,” explained Maker via a blog post.

This month, the Blockchain asked their users to vote on whether or not to raise the stability fee used within Dai. The users voted to raise the so-called stability fee for Maker’s Dai stablecoin to 3.5 percent. This is a 2% increase from the earlier stability fee which was 1.5%. As per reports, the blockchain is conducting a new poll which shall run through March 21, to increase the tax yet again. The informal polling through various community channels has shown strong support for an increase, according to the authorities.

“It’s never exactly at $1. You can always buy it for slightly above $1 and sell it for slightly below. But it’s much closer to $1 now,” says Rune Christensen, CEO of tech news publication BreakerMag.

David Cox

David is a finance graduate and crypto enthusiast. He projects his expertise in subjects like crypto and Blockchain while writing for CryptoNewsZ. Being from Finance background, he efficiently writes Price Analysis. Apart from writing, he actively nurtures hobbies like sports and movies.

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