The stability fee is for decentralised Stablecoin DAI which was founded by Maker DAO’s based on Ethereum blockchain.
As per a recent announcement made by the firm, a vote is being held by the firm to decide reduction of stability fee to 17.5% per year. The stability fee is for decentralised Stablecoin DAI which was founded by Maker DAO’s based on Ethereum blockchain. The announcement was made by the firm on May 17, 2019 in their official blog. While the announcement has been made, the decision to go through with the vote and date of voting is yet to be decided. If approved, the vote will be for a 2% reduction of stability fee from current level which will result in stability fees of 17.5% a year. The stability fees is a change made by Maker participants when the firm’s stable coin DAI is used for loan. As per the update posted in the blog, the proposal stating necessity to decrease stability rate came into discussion during the Maker DAO governance call that took place on May 16, 2019.
The firm is looking to change the yearly stability fees in a bid to improve their token’s peg to the U.S. Dollar. Since the beginning of this year, the exchange price of the token has held steady above $1 level. This year saw multiple attempts made in last few months to hike stability fee each of which saw sharp rise in value. This has greatly affected transactions resulting in necessity to make changes to stability fees. In March this year, the stability fees were raised twice. First hike saw 3.5% increase in value which was then rose to rate of 7.5% per year. In April, the fee was further increased during fifth voting session which brought the rate to 11.5% per year a 4 point increase in value.
Then at the start of this month, further vote from the token holders resulted in stability fee being hiked to all time highs and current levels of 19.5% per year. There have been various reports which started towards the end of April, in popular websites such as Cointelegraph which stated that DAI has been struggling to maintain peg against USD and comments from Andy Milenius – former CTO at MakerDAO who revealed his concerns over the project’s internal conflicts via open letter. While these updates are expected to have triggered the firm’s move to reduce stability rates, the firm’s CEO made a public announcement via which he claimed that DAI’s peg value against USD has stabilised since beginning of May in a bid to counter public opinion preventing further damages to the firm as it has lately seen reduced business on account of higher stability fee charge.
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