PSM Governance Timeline

(Edit) I don’t believe that it makes sense to continue polling past the current point, and I will not be putting up more PSM polls at the current time. See my comment here for details.

This post is intended to communicate the planned timeline for voting and possible implementation of the Peg Stabilization Module (described here: Peg Stabilization Modules: A Pre-MIP Discussion) I’ve communicated this a number of times informally, but this should be considered the canonical resource.

20th July - On-Chain Governance Poll: “Does Maker Governance want to implement the Peg Stabilization Module proposal in some form, targeting implementation at the end of July?” If this poll fails to have a majority yes vote, the rest of this timeline will not take place.

27th July - Ranked On-chain Governance Poll(s?) which will determine the parameters with which the PSM is deployed.

31st July* - Authorisation and activation of the PSM included in weekly executive vote.

*Note that the inclusion in the 31st July executive will depend on how smoothly the smart contracts domain work goes on the PSM. If the implementation is not ready by the 31st, it will be included in the 7th August Executive vote.

One possible difficulty for this timeline is figuring out what the poll or polls on the 27th of July should look like. I would recommend that governance start considering concrete options as to what certain parameter settings for the PSM should be.

I think it would be ideal if we had a set of 3-5 ‘parameter packages’ or strategies to choose from. This should help to ensure that whatever set of parameters ends up moving forward to the executive is at least consistent within itself.

Parameters available

For each PSM

  • Fee In
  • Fee Out
  • Debt Ceiling
  • ERC20

There can be one or more PSMs with the same or different ERC20 tokens operating with different fees and debt ceiling settings.


That would be great and we should go with that approach with all polls.

Added with available parameters for the initial version of the PSM.

Someone check my napkin math and thoughts please :slight_smile: :

Using curve as a comparison, because I’m not aware of anywhere else that has high enough volume to compare

Curve fee: 0.04%

It seems like Curve’s big stable coin basket has ~40 million total stable coins (5 million in dai), and they turn over about 3-5 million in daily volume (or about 10% of the total), I couldn’t figure out the slippage. I believe it’s low, <0.5%, but not zero

Using the 50 million USDC ceiling that people have thrown out for the PSM. Even if the PSM had 0.04% fee both ways, at 10% daily turnover, it would be 50M*.1*.0004*365 = 0.73M or an effective APR of 1.46%.

So that’s great, relatively in line with the current USCD-A vaults, so maybe we could have an even lower fee. Which got me thinking…

Could DEX aggregators route orders through PSM?

Unless I’m missing something in the ecosystem. There isn’t a DEX that can currently do a 10 Million USDC/DAI swap, regardless of slippage. Could DEXs route orders through the USDC/DAI pair on the PSM to take advantage of the arbitrage? So a USDC -> ETH swap would be a USDC -> (tap PSM) -> DAI -> ETH. And really, if the USDC/DAI spread is high enough, all er20 token swaps could be done through the PSM.

If that’s the case, then maybe a super low fee, eg 0.01% (effective 0.365% APR using same math above) would help encourage this use (because it would lead to selling DAI -> restoring PEG)

*Edited to fix curve fee


Interesting thought.


also we can offer loans (for the centralizes stablecoins) with lower rates than competitors and flash loans!

Other defi projects always need to pay liquidity providers… with PSM we can have a huge free liquidity that we can use to outperform other platforms by offering lower rates

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If anyone has any comments, or feels like doing some QA, the text for the first poll can be found here:

Comments or feedback can go in here:


Curve fee is 0.04%. Curve FAQ

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Recent update, I’m sure. (I swear it was 0.4%!!)

Nope, always was 0.04%. 0.4% would never make sense for stablecoin-to-stablecoin swaps

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This community is great, but is totally out of their element here. Instead of focussing on other verticals to earn fees, we should focus on long-term and sustainable (!!!) ways to restore the peg not on copying whatever protocol is currently hyped and see how their functionality could help restore the peg.

The arguments for the PSM seem to be really focussed on drifting away from DAI as a product instead of finding ways to restore the peg. The recent comments about loans and flashloans make me even more worried about the path this community is going.


Only “Governance Poll”, no MKR Holders poll ?

On-chain Governance polls are done using the MKR token.

20th July - On-Chain Governance Poll: “Does Maker Governance want to implement the Peg Stabilization Module proposal in some form, targeting implementation at the end of July?”

Why nothing here

Click on Polling
Direct Link to PSM poll


I second @Jtathmann’s point of a pretty tight spread on the fees (~0.04% or so) and an initial debt ceiling of around ~50M.

I heard some discussion on the last governance call about setting the fees to something like 5% or more. This seems like the wrong approach to me.

I hear the concerns of Rune and others regarding 3rd parties not integrating Dai because of the peg. If we really want to get some next level liquidity available, then I think a tight spread on the fees is the way to go. We want to be able to go from 10M USDC to Dai (and vice versa) with minimal slippage to onboard these larger players and build trust in the system. This is currently not available, and I doubt fees of 5% or even 0.5% are reasonable to allow this to happen. In my view it’s trust, trust, trust at this stage, and we need to provide these guarantees that if I’m in Dai, I will be able to get back out into fiat via USDC without massive slippage.


If I’m thinking correctly, there would be no slippage through the PSM, and just the nominal transaction fee. I think a high-volume, no-slippage system is something that the DeFi ecosystem would eat up, and might provide rationale for increasing the transaction fee from USDC-> DAI a smidge more

Exactly. I was talking about slippage from current market making. PSM would solve this.

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Completely agree. Low fees ~0.04% are critical. Let’s first show that it works to restore the peg. That’s more important than MKR income right now - even for the value of MKR itself.

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