single-image

MakerDAO Weighs Fourth Fee Hike as DAI Stablecoin Remains Below $1

Investors and developers who contribute to the ethereum-based programmatic lending protocol MakerDAO are debating a fourth increase to the amount charged to users of its U.S. dollar-pegged stablecoin DAI.

As a result of persistent imbalances in the token’s supply and demand since February, DAI has been trading below $1 on exchanges – hitting lows of $0.96 on major cryptocurrency exchange platforms such as Coinbase.

Issued via an open-source software, DAI uses what is known as a“Stability Fee” that charges an outstanding fee proportional to the amount of DAI being returned by the user. The fee can be paid in either MKR tokens or DAI. Holders of MKR, however, also participate in decision-making on how the protocol that produces DAI should function and “stake” their tokens in votes.

MKR holders have ratified three different proposals to raise this fee incrementally in the past few weeks. The last increase, executed on Friday, was by far the largest in the history of the project, raising the Stability Fee to 3.5 percent and prompting some concerns about whether the MakerDAO protocol can support a stable cryptocurrency.

In a weekly governance meeting today, risk management lead at the MakerDAO Foundation Cyrus Younessi noted that DAI prices as a result of Friday’s fee hike were “trending in the general right direction pointing to a chart depicting DAI market value weighted across “several different cryptocurrency exchanges.”

Source: https://dai.stablecoin.science/

However, pointing out that over-the-counter trades of DAI have been unaffected by this fee hike and persist well below the dollar mark, cryptocurrency trader and partner at blockchain-focused VC fund Distributed Capital Partners, Joseph Quintillian, said:

“I’m not seeing good trades above one or even close to $1 … We’re kind of in this $0.95 to $0.99 [over-the-counter range] but nothing over $0.99 yet.”

Echoing this sentiment, head of research at crypto asset manager Wyre Capital, Louis Aboud-Hogben, also said during today’s governance meeting that while “spot prices have moved up a bit … we haven’t been able to clear any trades.”

Aboud-Hogben added:

“It’s important we don’t get lured into a false sense of security here.”

Higher fees

As such, founder of the MakerDAO Foundation Rune Christensen was of the mindset that stronger, more pointed action was warranted by MakerDAO token holders.

“If we’ve seen no effect, I’m of the opinion that we should do a 4 percent increase,” said Christensen, adding that former Stability Fee increases thus far have had only “superficial effects on markets.”

Wanting to move ahead with some sort of actionable vote “as soon as possible,” Christensen suggested a vote for a more measured increase of 2 percent from the current 3.5 percent. The suggestion, however, was regarded as too hasty by some community members.

Pushing back on setting “arbitrary” numerical values to the next potential fee hike without proper data analysis, Richard Brown – head of core community at the MakerDAO Foundation – directed the discussion to be further debated on the community Reddit channel.

“Let’s make sure this debate doesn’t peeter out and that it continues on our Reddit channel … [Our decision] needs to be scientifically-based,” emphasized Brown.

Cyrus Younessi at a former MakerDAO Scientific Governance and Risk Meeting via YouTube

Leave a Comment

You may also like

Bitcoin

$25 Million in 2 Weeks: BlockFi Booms as Bitcoin, Ether Investors Seek Interest

single-image

The Takeaway

  • BlockFi’s interest-yielding deposit accounts, launched in beta in January and fully live this month, have attracted more than $35 million in crypto. Most of it is being lent to institutional borrowers.
  • BlockFi’s terms of service give the company significant leeway over how it uses depositors’ funds and what interest rate it can pay them. This flexibility is needed for the company to grow fast, CEO Zac Prince says.
  • Institutional investors borrow crypto at individualized terms, at interest rates from 4 to 12 percent, and BlockFi can call in the loans at any time.
  • When crypto prices move dramatically, BlockFi manages risks by making borrowers put up more collateral or selling some of it.
  • BlockFi is planning to roll out new products every six months and raise more capital.

–––––––

BlockFi wasn’t the first lending startup in the cryptocurrency market, but it’s likely the one getting the most attention these days — including some heat from community…

View More Article
Bitcoin Blockchain

Winklevoss Capital Partner Sterling Witzke: Dollar Is Not Designed for the Internet, but Stablecoins Are

single-image

Sterling Witzke has been working at Winklevoss Capital — a venture capital firm set up by the famous Winklevoss twins — for five years now. As a professional investor, she is very interested in financing early stage crypto and blockchain projects. She believes that stablecoins are perfectly designed for the needs of internet payments and will steadily gain popularity as the industry evolves.

We talked to Sterling Witzke about the future of fiat-pegged cryptocurrencies, the necessity of proper legal frameworks and the future of the maturing crypto industry.

Clarity is always good for an ecosystem

Ana Berman: How do you think, what will 2019 bring in terms of regulation? The question is related to the ads that Gemini recently launched, which said, in particular, “Crypto needs rules.” Don’t you think it undermines the whole idea of decentralization?

Sterling Witzke: The short answer is no….

View More Article
Bitcoin

Cryptopia Crypto Exchange Resumes Trading on 40 Crypto Pairs

single-image

New Zealand-based cryptocurrency exchange Cryptopia has resumed trading on 40 trade pairs, according to a tweet from the firm on March 18.

In the tweet, the company announces that it has “resumed trading on 40 trade pairs that we have quantified as secure. We will continue to expand this list as we clear more coins.” The update follows the exchange’s recent announcement of the plans to reopen trading on its platform by the end of March, following a $16 million hack in mid-January.

In January, Cryptopia suspended services after detecting a major hack that reportedly “resulted in significant losses.” The platform had initially informed the public it was undergoing unscheduled maintenance, issuing several updates before officially disclosing the breach.

After the initial reports of the hack, further evidence reportedly surfaced that hackers were…

View More Article