MakerDAO, the DeFi lending protocol behind DAI stablecoin, is implementing measures to boost demand. Holders of DAI are now eligible to receive increased interest rates of up to 8%.
A recent governance vote approved the introduction of the Enhanced DAI Savings Rate (EDSR). MakerDAO wants to make DAI more appealing with its new EDSR. The idea is to use yield-producing assets like government bonds to support DAI. A share of the revenue generated will be distributed to customers.
This project's timing fits with a 33% decrease in DAI's circulation from the previous year. Despite increasing the DSR to 3.49% last month, only $306M, less than 7% of the total supply, has been deposited into the DSR.
The EDSR rate will be flexible and determined based on the number of deposits in the DSR facility and the base reward rate. It is expected to decrease gradually over time as the usage of the protocol increases.
These measures aim to address the need for sustained growth in demand and capital inflows for DAI while also providing DAI holders with a fair value from the protocol's enhanced rewards.