We have set the DSR to 0% in September 2020 during times of being highly above the peg and relatively low stability fees to fix that.
Since then, we made really good progress on fixing the peg and fixing the supply side of DAI. Over the last weeks, the DAI-from-stablecoins is declining and being more and more replaced by DAI-from-ETH and other non-stablecoin vaults.
In this thread we started discussing bringing back the DSR to a non-zero level again, and it seems that there are at least some people thinking this is something we should consider.
Increasing the DSR
To give some numbers on how much of the fees are going to get spent on the DSR, it is probably worth the time to have a look at the different dimensions that needs to get factored into the equation
- Fees/DAI: right now we earn 2.38% on each DAI minted. This number is influenced by the utilization of the different vault-types and their stability fee (stablecoin vaults are running on 0% fees)
- Utilization of the DSR: not every DAI in circulation earns interest, just the DAI locked into the DSR. Compound had DSR integrated into its protocol, while we had a (un)reasonably high DSR (was once up to 8.75%) around half of the DAI was locked up there.
Given the current stats
|DAI in circulation in MM||Average fee per DAI||Annual Revenue (Fees) in MM|
We would end up with those costs / fee-revenues: (google spreadsheet to clone)
|DSR||DAI in DSR||Annual DSR Cost in MM||DSR % of Revenue||Annual Revenue (Fees - DSR) in MM|
- incentivize 3rd party apps to use DAI since they/their customers would benefit from the DSR (even if the chosen rate is low)
- drives demand (pretty questionable, since rewards from farming are a lot higher than even 1% - but probably some farms will integrate DSR too)
- we lose some of the fees that would go into the surplus buffer, only taking in account DAI inside Compound a 1% DSR would cost 2.3M DAI annually (5% of actual lending revenues).
- DSR is meant to be a tool for monetary policy to create upwards pressure on the peg - we aren’t below peg so this is basically a PR stunt
Please vote on ALL options you would support in an onchain poll. I know there are probably a bit too many options, but since this is uncharted territory, i decided for more of them.
- 0% (no change)
The Poll will run until February 11th; its outcome will result in a on-chain-poll assuming the outcome of the poll deems it necessary.