<\/p>\n
DAI stability fees were raised from between 6.41% and 7.18% to between 15% and 17.25%.<\/p>\n
MakerDAO has increased the stability fees associated with minting its DAI stablecoin by between around 140% and 150% to protect against the token suffering a possible demand shock.<\/p>\n
The move was implemented on March 10 following the passing of an \u201caccelerated\u201d executive proposa<\/a>l on March 8. The proposal approved hiking the fees associated with minting DAI against ETH, stETH, WBTC, and via its Spark money market protocol from between 6.41% and 7.18% to between 15% and 17.25%.<\/p>\n The yield paid on DAI deposits via the DAI Stability Rate (DSR) also increased from 5% to 15% alongside the fee hikes to encourage users to hold the token, while the delay on governance vote implementation reduced from 48 hours to 16 hours.<\/p>\n MakerDAO described the moves as temporary measures designed to protect against \u201ca potential excessive DAI demand shock caused by further bullish sentiment\u201d as traders offload stablecoins to speculate on digital assets amid the recent crypto rally<\/a>.<\/p>\n \u201cThis set of proposed, non-standard changes is a proactive measure designed to protect the Maker Protocol from temporary market volatility,\u201d MakerDAO tweeted. \u201cOnce the market stabilizes, all procedures and parameter configurations are expected to revert to their regular settings.\u201d<\/p>\n MakerDAO noted that its Peg Stability Module (PSM) reserves have fallen $320 million. The protocol also holds approximately $1.1 billion worth of real-world assets (RWAs), predominantly comprising U.S. Treasury Bills. However, the RWAs are subject to daily redemption limits, which may \u201cdelay processing relative to the demands on the on-chain stablecoin reserves.\u201d<\/p>\n PaperImperium of GFX Labs, a MakerDAO governance delegate,\u00a0said<\/a>\u00a0more than $900 million was fed into the PSM last week to cover large outflows. The funds were sourced by accessing USDC from cold storage and unwinding exposure to U.S. Treasury Bills. PaperImperium added that Maker\u2019s\u00a0Treasury Bill exposure<\/a>\u00a0has been steadily falling for the past three months.<\/p>\n PaperImperium attributed the massive PSM outflows to borrowing rates on MakerDAO and Spark being low compared to other DeFi protocols due to rates being driven by the three-month Treasury Bill yields.<\/p>\n \u201cAs DeFi rates rose relative to TradFi, MakerDAO was mispricing the cost to borrow from vaults or Spark,\u201d PaperImperium said. \u201cIn a floating currency, this would spark inflation. In a fixed exchange rate currency (like DAI), this drains foreign currency reserves (USDC) to defend the peg.\u201d<\/p>\n <\/p>\nDwindling reserves<\/h2>\n