[Urgent Signal Request] Keep the DSR at 0%

Due to a recent MIP and the raise of the base rate above 0%, the deposit saving rate (DSR) will be set at 0.25% (more detail here). That would be at MakerDAO expense.

Having an interest rate on DAI deposit is a good tool to reduce the DAI in circulation and push the DAI price up to $1. This is unlikely a good idea when DAI price is around $1.01 especially as most DAI are minted against stablecoin (unsure how much interest we will really get from those).

Urgent signal rules are the following : In order for the community to make an emergency change to a system parameter a signal request must reach a 50% majority and have a reasonable quorum of voters given recent participation. Currently, the required quorum is 40 voters.

Failure to get those 50% majority and 40 votes by Monday will result DSR to be set at 0.25% in an executive.

Do you agree to set the DSR at 0% and not equal to the Base Rate? This would be kept until a new signal request or a MIP that change that.

  • yes
  • no
  • abstain

0 voters

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Do these 40 votes include those who vote “abstain”? If so, how to undo a vote?

I don’t think it will do any harm, considering that 0.25% is much, much lower than literally anything else on offer right now.

That’s about a 750k DAI per year cost (current DSR) that will be spent to increase our peg issue.

I can’t see how spending money to have a bigger problem is a wise move.

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That we actually have to have a signal request for this is absurd. If peg>1.005 then set DSR=0. It should be automated policy.

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My point was that at such a low rate, it’s still pretty unlikely that anyone would put their Dai in the DSR anyway, considering there’s much more profitable things to do with it.

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Most of the dai deposited in the DSR is from compound so it will have an effect. As of now there are 291m in the DSR as per daistats

There is 290M in DSR, you can check on https://daistats.com/#/ . It’s mainly Compound that use it when it’s not lend. I agree that it’s unlikely to make a difference with a DSR at 0.25%, but 290M is no small amount of money already.

On one hand we have 400M DAI that are backed by stablecoin and we are not sure we can get any interest at all. On the other we want to pay 290M DAI to do nothing?

The urgent signal request is because no one thought about having a DSR > 0% when DAI > $1. It is not to change something, it’s to correct a mistake. The MIP wasn’t expected to work this way.

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Yes.

I don’t think there is an easy way to do this. The quorum is mainly there to ensure that enough people have had eyes on the signal, you have seen it and would rather vote against.

Yes, if you don’t want an urgent signal to pass you can try to block quorum by not voting. If I start to think people are seriously using this strategy I’ll change the rules.

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When 1DAI>1USD, DSR should be turned off automatically. Hasn’t this simple intelligence been realized yet?

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When 1DAI>1USD, 0% SF should be set automatically (the original design if anyone remembers).

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I agree it should be 0%, but not for any of the reasons mentioned.
Effective fees just increased from 0% to 4% without any effect on the peg. This means the schoolbook ideas on supply/demand is simply not applicable in crypto - or rather - we need to increase outstanding DAI to multiple billions before textbook knowledge on supply and demand starts taking effect.

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No, we ignored the risk (101%, also against the original design) and now we are able to charge 4% fee. Lower the LR a bit more and we’ll be able to charge as much as we want for a short period of time until the collateral is abandoned.

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Do we really want to increase the ETH to 2% where compound give -0.5% …
at 0% we are already the most expensive on the market.

If that the case we need to increase stable coin of 200M because every one is going to leave

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I think the SF of Ethereum should be 4%, and its risk premium should be at least consistent with the stablecoin risk premium.
In the loan market, the annual interest rate they choose to lend to “DAI” usually exceeds 4%, so there is no need to worry about interest rate competition between other lending platforms and us.

I don’t understand.
What you mean is that 4% ok because there is a market for 4%.
but noone is stupid if you can borrow at 0% instead of 4% you will go for the 0%.
the only reason we could lend with a premium is because of our reputation and existing “client”.

The lending mechanism of Compound and Aave is different from ours. Their DAI interest rate is sometimes frightening. High interest rate events of 50% to 100% often occur, so you cannot compare these platforms with ours.

By often you mean never?
Practically a 50% or 100% never happened.

This has passed with a large majority. As a result, the DSR will stay at 0% until there are further signals to the contrary.

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